Food/Drink and GST – 17 years on and it is not simpler!

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Food/Drink and GST – 17 years on and it is not simpler!


When GST was first introduced (in 2000) it was sold as making everything simpler. However, for those who can remember John Hewson and the birthday cake it is anything but. We look at two common food/drink items commonly served at café’s and food courts all over Australia that could be costing businesses tens of thousands of dollars in incorrectly treated GST each year.

Freshly squeezed Juice

You may be excused for thinking that the sale of a 100% fresh vegetable or fruit juice that meets the definition of GST-Free beverage might be GST-Free! Unfortunately, that may not be the case. The supply is not GST-free if it is a supply of food for consumption on the premises for which it is supplied.

Salad – to GST or not to GST that is the question

With the rapidly moving nature of the sales of salads at food courts, approximately six months ago, the ATO promised to undertake a review of what constituted a GST free salad as opposed to a GST-able salad. What has started out as what they thought would be a simple exercise has become more complicated and in Chris Jordan’s own words in a Senate hearing – “are we going down the birthday cake path?”.

Whilst there has been some guidance from the ATO now in relation to this matter – it will be interesting to hear their arguments once it gets tested in court.

Simplified accounting methods for food retailers

The ATO has recently released some further “simplification.” The ATO has released a draft GST simplified accounting methods (SAM) determination for food retailers.

The draft legislative determination specifies that eligible food retailers may use the following simplified GST accounting methods:

         -           the business norms method

         -           the stock purchases method, and

         -           the snapshot method.

A food retailer is eligible to use a simplified accounting method if it meets the following criteria:

         -           it is a retailer which sells taxable and GST-free food

         -           its SAM turnover is $2m or less, and

         -           it does not have adequate point-of-sale equipment.

There are solutions to all the above however it comes down to your individual business circumstances and how commercial those solutions are for you.

For further information, please contact Colin Samuel our Food and Hospitality specialist or speak to your ESV engagement partner on 02 9283 1666.