GST and frozen potato balls

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 frozen potato balls?

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies frozen potato balls.

The entity is a food supplier. The entity supplies potato balls.

The potato balls are comprised mainly of mashed potato. The product cannot be consumed until it has been thawed and cooked.

The entity is registered for the 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 potato balls are food for human consumption, and therefore, satisfy the definition of food contained 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). Potato balls are not specified in Schedule 1 nor are they food of a kind specified in Schedule 1.

In addition, the supply of the potato balls 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 when it supplies frozen potato balls under section 38-2 of the GST Act.