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ATO guidance for businesses supplying food and beverage products

The Australian Taxation Office (ATO) has made key changes to assist businesses in identify combination foods and understand when GST needs to be charged.

They have recently published a final Goods and Services Tax determination to help businesses identify when a supply of food is taxable, where it includes both GST-free and taxable components.

In addition they have also updated the Detailed Food List (DFL) Public Ruling.

The ATO have done this to align with the determination, provide more certainty, promote transparency and ensure a level playing field for all businesses.

The ATO’s recent updates include:

  • adding and updating entries that were identified as a priority through industry feedback adding new entries to reflect it views in recent advice and compliance activities, such as:
    • water, where alkaline or other additives are added
    • yoghurt with breakfast cereal, where the yoghurt and dry cereal are in separate compartments of the one product
    • popping pearls that are added to beverages such as bubble tea
    • sport or energy gels
  • updating 304 food and beverage product entries to better explain why they’re GST-free.

The ATO stated they are currently updating the GST food and beverage search tool to reflect these updates to the DFL Public Ruling.

Whilst this occurs, the ATO have advised business to use the DFL list to check whether GST applies to food or beverage products.

The ATO believe this is the easiest way to help businesses work out if GST applies on the sale price of their item, to ensure business get it right from the very start.

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