GST and fried wheat gluten

Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies fried wheat gluten?

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies fried wheat gluten.

The entity is a food supplier. The entity supplies fried wheat gluten.

The wheat gluten is partially cooked and requires further cooking before it can be eaten. The fried wheat gluten is supplied in a variety of shapes and can be used in stir-fries or vegetarian dishes.

The entity is registered for goods and services tax (GST).

A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded from being GST-free by section 38-3 of the GST Act.

Food is defined in section 38-4 of the GST Act to include food for human consumption, (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). The fried wheat gluten is partially cooked and requires further cooking before it can be eaten. Fried wheat gluten is food for human consumption and therefore, satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is a supply of food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Fried wheat gluten is not specified in Schedule 1 nor is it food of a kind specified in Schedule 1.

In addition, the supply of fried wheat gluten does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies fried wheat gluten.