Is the supply of the specified salad products (the Salad Products) a GST-free supply of food pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 ?
No.
You are registered for GST. You sell a variety of salads including the Salad Products. You provided links to your website where the products are promoted, as well as images of the Salad Products, their packaging and labelling. The labels include information such as the size, serving suggestions, ingredients and nutrition information. The Salad Products are presented as side dishes to be consumed with other food. The labelling specifies multiple number of serving sizes per pack and provides garnishing and pairing suggestions. The total weight of each of the Salad Products exceeds 150g. The Salad Products consist of different combinations of a wide range of ingredients in balanced portions such as, pasta, rice, couscous, vegetables, legumes, grains, nuts and seeds that have been seasoned and dressed. You also provided the percentage composition of each ingredient in each of the Salad Products. The Salad Products do not contain any meat or seafood. The Salad Products do not contain instructions for heating. The Salad Products require refrigeration for their storage.
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 New Tax System Goods and Services Tax Act 1999 schedule 1 clause 1 item 4 A New Tax System Goods and Services Tax Act 1999 schedule 1 clause 2 A New Tax System Goods and Services Tax Act 1999 schedule 1 clause 3
All legislative references in this private ruling are to the A New Tax System (Goods and Services Tax) Act 1999 , unless otherwise indicated Relevant GST legislative provisions Section 38-2 provides that: A supply of food is GST-free. Food is defined in section 38-4 to include 'food for human consumption (whether or not requiring processing or treatment, (paragraph 38-4(1)(a)). The Salad Products are food for human consumption and therefore satisfy the definition of food. Section 38-3 provides for food that is not GST-free. Paragraph 38-3(1)(c) provides that a supply of food is not GST-free under section 38-2 of the GST Act if it is a supply of food of a kind specified in the third column of the table in clause 1 of Schedule 1 (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind. Relevant to the Salad Products is Item 4 in Schedule 1 (item 4) in the category of 'prepared food', which lists: food marketed as a prepared meal, but not including soup Clause 3 of Schedule 1 (clause 3) specifies that item 4 applies only to foods that require refrigeration or frizzing for their storage.
Additionally, clause 2 of Schedule 1 provides that for the purpose of determining whether particular food is covered by any of the items in the table relation to the category of prepared food, it doesn't matter whether the food is supplied, hot or cold, or requires cooking, heating, thawing or chilling prior to consumption. The approach to food classification issues established by the case law In earlier food classification cases, including Lansell House Pty Ltd v Commissioner of Taxation [2010] FCA 329, and Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6 ( Lansell House 2011 ), the Courts have confirmed that classification decisions for GST purposes are questions of fact and degree, a matter of impression and a combination of fact-finding and evaluative judgment. The question to be answered is whether the product at issue comes within the genus, class or description of a product specified in Schedule 1. Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115 ( Simplot
) is a recent case in which the Federal Court considered the GST treatment of a range of frozen food products supplied or imported by Simplot Australia Pty Ltd. These products consisted of mixed vegetables combined with spices or seasonings, and in some cases, grains. Some were marketed as 'sides' and several included explicit or implied serving suggestions-often depicted through images showing the products plated with added proteins such as chicken or pork. Consistent with previous food classification decisions, on the meaning of the words 'food of a kind' in paragraph 383(1)(c), in Simplot, the Court said that effect needs to be given to all the words. The Court agreed with the findings in Cascade Brewery v Commissioner of Taxation [2006] FCA 821 ( Cascade ) that the words 'of a kind' are words of expansion rather than limitation, and the finding in Lansell House 2011 , that the use of the words 'of a kind' in paragraph 38-3(1)(c) add further generality to the description of the items specified in Schedule 1. In Simplot,
the Court also noted that a food product does not need to be specified in Schedule 1, it is sufficient if the food is 'of a kind specified'. That is, the question is whether the product at issue is a member of class or category of food that is marketed as a prepared meal. The Court concluded that all the products were foods of a kind marketed as prepared meals and were therefore taxable. See Simplot at [134-141]. At [105 - 110], in Simplot, the Court considered the meaning of the words 'marketed as' in the context of item 4. Relying on the reasoning in Cascade and Lansell House, it said when considering if a product is of a kind marketed as a prepared meal the question is not just how the product itself is marketed by the seller but whether the product is 'of a kind' that is marketed as a prepared meal by other sellers. That is the test requires considering whether the product belongs to a broader class of foods that are marketed in that way. This requires examining how comparable products are promoted and understood in the marketplace. The Court also observed that marketing
in this context refers to the actions of sellers in presenting or promoting a product to consumers, and not how consumers ultimately choose to use the product. The meaning of 'prepared meal' was considered in Simplot at [111-126]. The Court noted that the phrase 'prepared meal' is to be given its ordinary meaning. On the meaning of 'prepared meal', the Court stated at [124-125]: ... the attributes of a "prepared meal" are to be discerned from common experience. Those attributes include: (a) quantity - a meal connotes a quantity of substance, even if it may be termed a small meal; (b) composition - a prepared meal connotes food consisting of more than one ingredient or element. Whether a combination of foods constitutes a meal is a question of fact and degree. A dish comprised solely of vegetables can be a meal. However a serving of a mix of vegetables (eg, peas and corn) may not be a meal; (c) presentation - a prepared meal connotes a combination of foods that is complete. Matters such as seasoning, sauces and flavourings may all be relevant in determining whether foods are of a kind marketed as a prepared meal.
Foods of a kind marketed as a prepared meal therefore refers to foods of a sufficient quantity, mix and seasonings as to be regarded by the ordinary person as being of a kind that are marketed as a prepared meal. Additionally, in Simplot at [126], the Court noted that the form of packaging is not determinative of whether a food is of a kind marketed as a prepared meal. The Court rejected the taxpayer's contention that foods that are not packaged in containers from which they could be consumed were not 'prepared meals'. It further held that foods packaged in a form intended to serve more than one individual do not cease to be foods of a kind marketed as prepared meals. Accordingly, in determining whether a product is food of a kind marketed as a prepared meal, the assessment relies on common sense and common experience. It requires consideration of the product's overall attributes, including whether the product belongs to a class of food that is marketed as a prepared meal. The Commissioner's view on when a product is 'food of a kind marketed as a prepared meal' has been outlined in Goods and Services Tax Determination 2025/1 -
Goods and services tax: supplies of food of a kind marketed as a prepared meal (GSTD 2025/1). GSTD 2025/1 considers what products are food of a kind marketed as a prepared meal primarily by reference to the Federal Court's decision in Simplot. GST classification of the Salad Products All the Salad Products meet the requirement of clause 3 as they require refrigeration for their storage. Quantity As stated in Simplot at [126], foods packaged in a form intended to serve more than one individual do not cease to be foods of a kind marketed as prepared meals. Paragraphs 48 to 53 of the of the GSTD 2025/1 provide our view in relation to quantity. Paragraph 52 of GSTD 2025/1 confirms the approach taken in Simplot in respect of the quantity and states 'It is the total weight of the product, as outlined on its label that is relevant'.
All the Salad Products are supplied in sufficient quantities ranging from X to X. The recommended serving sizes on the packaging do not affect the analysis, as the overall quantity of each product is sufficiently substantial as to be regarded as food of a kind marketed as a prepared meal. It is entirely up to the consumer to decide how much they choose to consume. As such, we consider the Salad Products are of sufficient quantity to be prepared meals for the purpose of Item 4. Composition and presentation Paragraphs 54 to 57 of GSTD 2025/1 outline our view regarding composition as follows: Composition 54. In Simplot, the Court held that a prepared meal involves food consisting of more than one ingredient or element. 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 a matter of fact and degree whether a particular combination of ingredients or elements constitutes a meal.
55. 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. 56. The composition of a product may also indicate its suitability to be eaten at a particular meal occasion. For example, products containing cereal or muesli are generally consumed for breakfast and are commonly marketed as breakfast foods ... On the other hand, products containing custard, jelly and cake are generally consumed for dessert and are not a kind of food that is marketed as a prepared meal... 57. In practice, applying common sense and common experience involves considering whether the product has a similar composition to products sold as a prepared meal by entities in the food industry. For example, in Simplot, the Court characterised the products as pasta in sauce, risotto or fried rice and observed that these types of foods are, as a matter of common sense and common experience, foods of a kind marketed as a prepared meal.
Paragraphs 58 to 66 of GSTD 2025/1 explain presentation. Paragraphs 58 to 62 of GSTD 2025/1 relevantly state: Presentation 58. In Simplot, the Court also held that a prepared meal involves a combination of foods that is 'complete'. This attribute was referred to as '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 with all necessary inclusions to be a complete 'meal'. 59. First, the product should be 'complete' in the sense of being prepared and should require only limited further preparation, assembly or activity by the consumer. When determining whether a product is 'complete', the following principles are relevant: • If a product is sold fully assembled, the fact that all or part of it may be raw does not prevent it from being sufficiently prepared, even if it requires cooking before consumption. ... • Some products, including sushi and salad products, are ready for consumption when sold even though part of them may be raw. ...
60. Second, the product should be presented as being 'complete' in the sense of being a complete meal. Whether a product is presented as a complete meal is a matter of fact and degree. 61. Where a product includes all required seasonings, sauces or flavourings, this is an indicator that the product is presented as complete... 62. A serving suggestion on the packaging of a product, while a relevant aspect of the product's marketing, is not determinative of whether it is presented as being complete... In relation to salads, paragraph 69, 72 and 73 of GSTD 2025/1 state: 69. A salad product will be food of a kind marketed as a prepared meal if it is the kind of salad product that, as a matter of common sense and common experience, is marketed as a prepared meal by entities in the food industry. This is to be determined objectively by considering the attributes of salad products that are marketed as prepared meals (including quantity, composition, and presentation) and those of the product itself. ...
72. Generally, the kinds of salad products that are marketed as a prepared meal contain a variety of ingredients, a balanced proportion of ingredients and a sufficient overall quantity to constitute a meal. Salad products with these attributes are the kind that are commonly marketed as complete meals to be eaten on their own. 73. Salad products that lack variety and a balance of ingredients are less likely to be food of a kind marketed as a prepared meal. This is a question of fact and degree. As stated in paragraph 55 of GSTD 2025/1, it is necessary to consider the nature of the ingredients or elements and not simply the number of ingredients or elements. Based on the ingredients in each of the Salad Products, we consider that the Salad Products include different combinations of a wide range of ingredients in balanced portions that have been seasoned and dressed and can therefore constitute a meal.
The fact that the Salad Products do not contain any meat or seafood is not a relevant consideration. As stated in paragraph 19 of GSTD 2025/1, a dish comprising solely of vegetables can still constitute a meal. The Salad Products possess the characteristics of a complete dish without the need to add meat or seafood. It is also noted that none of the products considered in Simplot contained meat or seafood. The Court stated that although consumers could choose to add protein, such as meat or seafood, this was not necessary for the products to be regarded as prepared meals. The fact that the Salad Products do not contain instructions for heating is irrelevant. As outlined above, clause 2 of Schedule 1 provides that for the purpose of determining whether particular food is covered by any of the items in the table relation to the category of prepared food, it doesn't matter whether the food is supplied, hot or cold, or requires cooking, heating, thawing or chilling prior to consumption. In Simplot, the Court observed that presenting/marketing a product as a side dish by the supplier was not a determinative factor in establishing its characteristics. At [129 and 130] it stated:
129. Similarly, whilst the applicant sought to characterise at least some of the Products as "side dishes" by their labelling, packaging and serving suggestions or recipes, that form of marketing was undertaken with a keen awareness of the GST treatment of prepared meals. A serving suggestion is just that - a suggestion and not a requirement. A taxpayer by their own marketing behaviours cannot dictate the characterisation of their product when the statutory question directs attention not to the specific product but to products "of a kind". A more objective approach is required. [Emphasis added] 130. Furthermore there is no necessary dichotomy between a meal component or side dish and a meal. There is no reason why a food may not be of a kind that is marketed as a meal component as well as being food of a kind that is marketed as a meal. In that regard, paragraphs 31 and 32 of GSTD 2025/1 state: 31. In determining whether a product is of a kind marketed as a prepared meal, it does not matter whether the product may also be of some other kind. For example, in Simplot,
the fact that the products could be described as food marketed as a meal component or side dish did not mean they could not also be food of a kind that is marketed as a prepared meal. 32. Similarly, the fact that a product is marketed as a snack does not mean it could not also be food of a kind marketed as a prepared meal. Determining whether a product is a side dish, meal component or snack will not assist in answering the statutory question, which is whether the product is food of a kind marketed as a prepared meal. The Salad Products are sold in a quantity that is sufficiently substantial to be regarded as a kind of food marketed as a prepared meal. Further paragraph 49 of GSTD 2025/1 states that 'The product need not be a substantial or big meal - a light or small meal is still a meal'. Simplot confirms that, for the marketing test in Item 4, the inquiry is not whether the specific product is itself marketed as a prepared meal. Rather, as noted at [105-110], the test asks whether the product belongs to a broader class of foods that are marketed in that way. This requires examining how comparable products are promoted and understood in the market.
The Salad Products belong to a broader class of foods that are marketed by other salad suppliers, such as restaurants, cafes, take aways and salad bars, as prepared meals. While the ingredients or the specific combination of the ingredients in the Salad Products may differ from those used by other salad suppliers, this does not change our conclusion as a salad can be a versatile combination of almost any mix of raw or cooked ingredients, designed to create a balance of flavour, texture, and nutrition. Conclusion After examining the characteristics of the Salad Products, we consider that the Salad Products are foods of a kind that are marketed as prepared meals. This is because they are of a sufficient quantity, contain a variety of ingredients in balanced portions, that are prepared, cooked where required, then combined, seasoned and dressed. Similar to the products considered in Simplot , the Salad Products are as a matter of common experience in modern Australia, foods of a kind that are marketed as prepared meals. The sales of the Salad Products are taxable supplies under section 9-5.