Cereal crime: Are you charging GST correctly on food and breakfast products?

If your business supplies food and breakfast products that consist mostly of seeds or nuts, you may need to include goods and services tax (GST) in the selling price.

GST applies to food products that consist principally of seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or a similar process. These are a taxable supply and specifically excluded from being GST-free.

While breakfast cereals are GST-free, products that mainly consist of roasted nuts or seeds are not. This means GST applies to breakfast products that consist of more than 50% of roasted nuts, even if the product is called a breakfast cereal.

Remember to regularly check that you’re charging GST correctly on these products. If you haven’t charged GST previously, you should make a voluntary disclosure or speak with your accountant.

You can also use the GS1 Australia database, the National Product Catalogue (NPC, previously called GS1net), to determine if GST applies to food and beverage products.

The ATO won’t apply penalties or unfavourable adjustments where you follow the ATO approved classification guidance on NPC. Find out more at PS LA 2012/2.

For more information to help you determine the GST status of food products, refer to the ATO webpage GST and food.

Source: ATO Newsroom