1 Is the supply of the Products GST-free under section 38-2 of the GST Act?
1 No This ruling applies for the following period xx December 20xx - xx December 20xx
You are registered for GST. You will launch a range of food products (the Products) described in their packaging as meals. The Products contains all the ingredients necessary for the meals including sauces. The consumers do not need to add any other ingredients. Each of the Products is a combination of protein (chicken, pork or beef), vegetables and cereal products (rice or noodles). The ingredients are par cooked. To prepare the Products for consumption, they will have to thaw the ingredients, mix them in a pan over medium to high heat, and stirred. The process takes no more than 10 minutes. Marketing material for the Products has not yet been developed. When launched, their products will be displayed on your website and social media accounts. The exact positioning of the Products in the supermarket is yet to be determined. It may be placed in the frozen meals and ingredients section along with single serve microwave meals, chips, pies, chicken tenders, fish, pasta bakes and multi-serve meals. Each of the Products weighs more than 150 grams.
A New Tax System (Goods and Services Tax) Act 1999 , section 9-5 A New Tax System (Goods and Services Tax) Act 1999 , section 38-2 A New Tax System (Goods and Services Tax) Act 1999 , section 38-3 A New Tax System (Goods and Services Tax) Act 1999, section 38-4
A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if all the following conditions are met: (a) the supply is made for consideration; and (b) the supply is made in the course or furtherance of an enterprise that the supplier carries on; and (c) the supply is connected with the indirect tax zone; and (d) the supplier is registered, or required to be registered, for GST. However, a supply is not a taxable supply to the extent that it is GST-free or input taxed. GST-free supply 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 Products are food for human consumption under 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 food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). The falafel pita pocket is not specifically listed in Schedule 1. As such, the issue is whether the Products are 'food of a kind' specified in Schedule 1. The phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary (1997) does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean: '1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4...' Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question. In addition, Lansell House Pty Ltd v FCT
[2011] FCAFC 6at [30] relevantly provides: The use of the words "of a kind" in s 38-3(1)(c) of the GST Act adds further generality to the description of the items described in Schedule 1: Air International Pty Ltd v Chief Executive Officer of Customs (2002) 121 FCR 149 per Hill J. Thus, a new product that does not possess all of the same characteristics of known crackers may nevertheless be within the relevant item... Item 4 in the category of 'prepared food' in Schedule 1 (item 4), provides that 'food marketed as a prepared meal (but not including soup)' is subject to GST. Clauses 2 and 3 of Schedule 1 state: 2 Prepared food, bakery products and biscuit goods For the purpose of determining whether particular *food is covered by any of the items in the table relating to the category of prepared food, bakery products or biscuit goods, it does not matterwhether it is supplied hot or cold, or requires cooking, heating, thawing or chilling prior to consumption. 3 Prepared meals Item 4 in the table only applies to *food that requires refrigeration or freezing for its storage.
As regards the Products, it does not matter whether they are supplied frozen and have to be thawed and heated prior to consumption. The Products require refrigeration for storage. Thus, clauses 2 and 3 above apply to the Products. Are the Products marketed as prepared meals? Goods and Services Tax Determination GSTD 2025/1 Goods and services tax: supplies of food of a kind marketed as a prepared meal explains the ATO view on the circumstances in which products are food of a kind 'marketed as a prepared meal.' Paragraphs 46 to 66 of GSTD 2025/1 provide that a product will be food of a kind marketed as a prepared meal if it is the kind of food that, as a matter of common sense and common experience, is marketed as a prepared meal. This is determined objectively by considering the following attributes of the product: • Quantity - As a matter of common sense and common experience, a product is not food of a kind marketed as a prepared meal unless it is of a sufficient quantity for a meal. We consider that products of less than 150 grams in total weight will not be a sufficient quantity for a meal.
• Composition - A product is more likely to be food of a kind marketed as a prepared meal where it is made from multiple ingredients or elements. It is necessary to consider the nature of the ingredients or elements and not simply the number of ingredients or elements. A product that includes some combination of protein, vegetables or a grain product (for example, pasta, rice or bread) is more likely to be of a kind marketed as a prepared meal. • Presentation - A product's presentation will indicate it is food of a kind marketed as a prepared meal if it is presented as being complete. 'Being complete, in this context involves both the degree of preparation and whether the product is supplied will necessary inclusions to be a complete meal.
If cooking or heating is required for the product to be ready for consumption, this should only require limited activity by the consumer, such as cooking or heating in a microwave, oven, frying pan or saucepan. Simply heating a product and stirring regularly during the process will not mean, by itself, that the product is not sufficiently prepared. This will apply even where these activities are required to complete the cooking process for a partly cooked product. The Products are described as a "Meal". Each of the Products weighs more than 150 grams; thus, we consider the Products to be of sufficient quantity to be a meal. The Products are a combination of protein (chicken, pork and beef), vegetables and grain products (rice and noodle). In terms of composition, we consider the Products to be food of a kind marketed as prepared meals.
The Products contain all the necessary ingredients; thus, consumers do not need to add anything else. The ingredients are par cooked. All that is needed is to heat the Products by mixing the ingredients and stirring them regularly in a hot pan. It takes no more than 10 minutes to prepare the Products for consumption. Given that no other ingredients are required and the cooking and heating activity of the consumers is limited, we consider the Products to be sufficiently prepared The attributes of the Products indicate that they are food of a kind marketed as a prepared meal. As the Products arefood of a kind specified in Schedule 1, their supply is excluded by paragraph 38-3(1)(c) of the GST Act from being GST-free. The supply is a taxable supply provided the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are all satisfied.