Issue
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 hopia?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies hopia.
The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. The entity supplies various types of hopia.
Hopia is an Asian pastry. Hopia consists of a sweet filling enclosed in a lightly cooked thin pastry. The fillings for hopia may be made from sweetened ingredients such as red beans, mung beans, yam or winter melon.
The entity is registered for the goods and services tax (GST) and the supply by the entity satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
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). Hopia is food for human consumption and therefore, satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act.
However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Item 23 of Schedule 1 (Item 23) lists tarts and pastries. Hopia is a pastry with a sweet filling. Therefore, hopia is food of a kind covered by Item 23 and is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision of Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies hopia.