Fact sheet for small business Business

GST and food

GETTING STARTED GST AND FOOD

Not all food sales involve GST. If you sell food in your business,
What is GST? you need to know which items to charge GST on. Generally, you
The goods and services tax (GST) is a tax of 10% on most need to include GST in the price of goods and services you sell
goods and services sold or consumed in Australia. If you or provide. These are called ‘taxable sales’.
run a business, you need to know about GST.
There are some goods and services which are ‘GST-free’,
When your business is registered for GST you need to: meaning you don’t have to charge your customer GST and
n include GST in the price of sales to your customers, and you don’t have to pay this GST to the ATO. Most basic food
n claim credits for the GST included in the price of purchases is GST‑free.
for your business. Examples of ‘GST-free’ foods are:
n bread and bread rolls without icing or filling

To find out more about GST, and how to register n cooking ingredients such as flour, sugar and cake mixes
your business: n fats and oils for cooking
n visit our website at www.ato.gov.au/gst n milk, cream, cheese and eggs
n refer to the following brochures, which are available n spices and sauces
on our website n fruit juice containing at least 90% by volume of juice
– GST for small business (NAT 3014) in English n bottled drinking water
– Tax basics for small businesses (NAT 1908) in English n tea and coffee (unless it’s ready to drink)
– GST (NAT 72420) available in other languages n baby food and infant formula
n phone the ATO on 13 28 66 n meats for people to eat (except prepared meals or snacks)
n talk to your tax adviser. n fruit, vegetables, fish and soup
n spreads, such as honey, jam and peanut butter
n breakfast cereals
n rice, cooked or uncooked (but not hot).

Even though your item may be in the GST-free food

list, it may still be taxable under some circumstances. For
example, bread rolls are GST-free unless you sell them in
a restaurant where your customers will eat them at the
restaurant. See ‘Where food is sold and consumed affects
GST’ on page 3 for more information.

NAT 74243-06.2012
GST and food

Examples of ‘taxable foods’ are: GST AND THE FOOD SUPPLY CHAIN
n bakery products such as cakes, pastries and pies GST is applied at certain stages in the food supply chain. If you
n biscuits, cones and wafers are a GST-registered business, you can claim ‘GST credits’ for
n savoury snacks such as potato chips
any GST you pay in the price of food items you purchase for
your business.
n chocolates and lollies
n ice cream
n soft drinks and flavoured milk such as chocolate milk You cannot claim GST credits for food supplied as an
n food platters ‘entertainment expense’ if you cannot claim an income tax
n food marketed as prepared meals such as sushi, curry and deduction for it.
rice dishes
n any food not for people to eat, such as food for pets
n all food and drinks sold in restaurants or for consumption on EXAMPLE: When is GST applied in the food supply chain?
the premises – see ‘Where food is sold and consumed affects
GST’ on page 3 for more information. A plant nursery sells lettuce seeds to a farmer. The seeds
There are some items that are not considered to be food as you are taxable as they are plants under cultivation, and people
cannot eat them yet. These items are taxable and include: cannot eat them yet. The plant nursery charges GST to the
n live animals farmer and pays that to the ATO.
n plants and seeds that grow into fruit and vegetables. The farmer can claim a GST credit for the GST that they
paid in the purchase price of the seeds.

If you are not sure whether your food is taxable The farmer grows the lettuce and sells it to a vegetable
or GST‑free you can always check with the ATO: wholesaler, without charging GST. The lettuce is GST-free
n visit our website at www.ato.gov.au/foodindustry
as it is now a food for human consumption.
then select ‘Basic topics’, ‘Publications’ and ‘Detailed The vegetable wholesaler sells the lettuce GST-free to
food list’ – this list provides the GST status of more a supermarket.
than 500 food items
At the supermarket, people buy the lettuce GST-free.
n refer to GST food guide (NAT 3338) in English, which
is available on our website
n phone us on 13 28 66
n talk to your tax adviser.

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GST and food

Where food is sold and consumed affects GST

All food and drinks sold in a restaurant or to be eaten or EXAMPLES
drunk at the place they are sold are taxable even if they are
a GST‑free item. Anh’s bakery
Anh sells bread and plain bread rolls at her bakery.
This means, you must charge your customers GST and pay
These are without icing or fillings. She sells the bread to
that GST to the ATO if food and drinks are sold at:
her customers with the intent that they will eat it elsewhere.
n a restaurant or cafe
n a snack bar or stand She doesn’t need to charge her customers GST.
n any venue associated with leisure, sport or entertainment
Iman’s restaurant
such as Iman sells plain bread rolls at his restaurant. These are
– a sports ground served in the restaurant and intended to be eaten at the
– a golf course restaurant.
– a gym
Iman charges GST to his customers and he pays this GST
– a racecourse to the ATO.
– a theatre
– a museum Ali’s coffee van
– a gallery Ali runs a mobile coffee business. He drives his van to
– a cinema various places where there is a festival or an event. He sells
– an amusement park. hot drinks such as coffee and hot chocolate. He also sells
bottled water. The hot drinks are taxable as these are
considered ‘ready to drink’. The bottled water is also
In some cases charitable institutions, charitable taxable as it is sold to customers with the intention that they
funds, gift deductible entities and government schools will drink it at the event.
(for example, a tuckshop) that sell food for fundraising Ali charges GST to his customers and he pays this GST
or something similar do not charge GST. to the ATO.

Haruka’s juice bar

Haruka runs a juice bar at a food court. She sells 100%
Go to www.ato.gov.au/nonprofit or check with fruit juice, smoothies and bottled water, all of which are
the ATO on 13 28 66 if you’re not sure. taxable as they are intended to be drunk at the food court.
Haruka charges GST to her customers and pays this GST
to the ATO.

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GST and food

OUR COMMITMENT TO YOU

MORE INFORMATION We are committed to providing you with accurate, consistent
and clear information to help you understand your rights and
For more information: entitlements and meet your obligations.
n visit our website at
– www.ato.gov.au/gst If you follow our information in this publication and it turns out
to be incorrect, or it is misleading and you make a mistake as
– www.ato.gov.au/foodindustry
a result, we must still apply the law correctly. If that means you
– www.ato.gov.au/otherlanguages for tax and owe us money, we must ask you to pay it but we will not charge
superannuation information in 25 languages. You you a penalty. Also, if you acted reasonably and in good faith we
can also watch or download the video Your Business will not charge you interest.
and Tax which explains what you need to know about
Australia’s business tax system. This is available in If you make an honest mistake in trying to follow our information
six languages including English. in this publication and you owe us money as a result, we will
n phone the ATO business tax infoline on 13 28 66 between not charge you a penalty. However, we will ask you to pay
8.00am and 6.00pm, Monday to Friday, Eastern Standard the money, and we may also charge you interest. If correcting
Time (EST) the mistake means we owe you money, we will pay it to you.
n visit one of our shopfronts
We will also pay you any interest you are entitled to.
n speak to your tax adviser. If you feel that this publication does not fully cover your
circumstances, or you are unsure how it applies to you,
If you are deaf, or have a hearing or speech impairment,
you can seek further assistance from us.
phone us through the National Relay Service (NRS) on
the numbers listed below: We regularly revise our publications to take account of any
n TTY users, phone 13 36 77 and ask for the changes to the law, so make sure that you have the latest
ATO number you need information. If you are unsure, you can check for more recent
n Speak and Listen (speech-to-speech relay) users, phone information on our website at www.ato.gov.au or contact us.
1300 555 727 and ask for the ATO number you need This publication was current at June 2012.
n internet relay users, connect to the NRS on
www.relayservice.com.au and ask for the
ATO number you need.

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© AUSTRALIAN TAXATION OFFICE FOR THE PUBLISHED BY

COMMONWEALTH OF AUSTRALIA, 2012
Australian Taxation Office
You are free to copy, adapt, modify, transmit and distribute this material as Canberra
you wish (but not in any way that suggests the ATO or the Commonwealth June 2012
endorses you or any of your services or products).
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