GST And Food, When Is It Taxable?
Not all food sales need to include GST. For business owners knowing whether they need to charge GST in a sale is paramount. As there are many goods and services which are GST free, you will need to ensure that you know which goods you are obligated to charge GST on or not in order to correctly pay the ATO.
So what food items are GST free?
GST Free Foods
Generally, most staples and basic foods are GST free. Often, a readymade product, even when it uses these staples as ingredients, is not GST free. Here are some examples of GST free foods:
- bread and bread rolls without icing or filling
- cooking ingredients such as flour, sugar and cake mixes
- fats and oils for cooking
- milk, cream, cheese and eggs
- spices and sauces
- fruit juice containing at least 90% by volume of juice
- bottled drinking water
- tea and coffee (unless it’s ready to drink)
- baby food and infant formula
- meats for people to eat (except prepared meals or snacks)
- fruit, vegetables, fish and soup
- spreads, such as honey, jam and peanut butter
- breakfast cereals
- rice, cooked or uncooked (but not hot)
There will be occasions where some of these items are not GST free. occasions where some of these items are not GST free. You should always talk to your accountant to find out whether you need to charge GST on a item or not. An example of an above item not being GST free would be bread rolls sold in a restaurant, where customers will eat them, are not GST free.
What is taxable?
Most foods that are ready made or sold in bakeries/restaurants are taxable. Other non-staple food like sweets and deserts are also not taxable. Some examples include:
- bakery products such as cakes, pastries and pies
- biscuits, cones and wafers
- savoury snacks such as potato chips
- chocolates and lollies
- ice cream
- soft drinks and flavoured milk such as chocolate milk
- food platters
- food marketed as prepared meals such as sushi, curry and rice dishes
- any food not for people to eat, such as food for pets
- all food and drinks sold in restaurants or for consumption on the premises – see ‘Where food is sold and consumed affects GST’ for more information.
There are some items that are taxable as they are not yet considered food. These include:
- Live animals
- Plants and seeds that grow into fruit or vegetables
When does a GST free food become taxable?
Often along the food supply chain a GST free item will become taxable. They will then need to have GST applied to their sale.
A plant nursery or seed supplier/live animal farmer will need to supply their produce with GST. When the vegetable farmer or butcher purchases the product, they can claim a GST credit. Once they sell their product as, for the vegetable farmer a carrot, or for the butcher as cuts of meat, they do not have to charge GST.
When the item is sold at the supermarket it is GST free. However, GST is applied if the product is then sold at one of these venues:
- a restaurant or cafe
- a snack bar or stand
As well as any venue associated with leisure, sport or entertainment such as:
- a sport ground
- a golf course
- a gym
- a racecourse
- a theatre
- a museum
- a gallery
- a cinema
- an amusement park
Non for profits and government schools may not have to charge GST on GST free items they sell. If you are unsure whether you have to charge GST contact GSTregister.com.au.
How to register for GST
Registering for GST is easy with GSTregister.com.au. All you have to do is fill out a simple form and we shall register you with the ATO. If you need any GST assistance you can also contact us and we will be able to assist you. Give us a call today.