GST on Frozen Foods: ATO Finalises Position Following Simplot Decision

The Australian Taxation Office (ATO) has released a Decision Impact Statement (DIS) following the Federal Court’s ruling in Simplot Australia Pty Limited v FCT [2023] FCA 1115. This case focused on whether certain frozen food products qualify as GST-free under the Food for Human Consumption provisions.

The ATO has confirmed that the Court’s decision supports its long-standing classification: certain frozen meals and components are taxable, as they are considered prepared meals rather than basic food.

What Was the Simplot Case About?

Simplot, a major supplier of frozen food products, challenged the ATO’s view that some of its meal components were subject to GST. The Federal Court ultimately ruled in favour of the Commissioner, upholding the ATO’s position that these products are taxable as prepared meals when marketed and sold in a way consistent with convenience or ready-to-eat consumption.

Key Outcomes from the ATO’s Decision Impact Statement

1. Confirmation of ATO Classification
The ruling confirms that products resembling meals or designed to be part of a ready-to-eat dish will not qualify as GST-free food, even if individually they resemble basic food items. This maintains the ATO’s long-standing position and provides certainty for food manufacturers and distributors.

2. GSTD 2025/1 – New Guidance on Prepared Food
The ATO released GSTD 2025/1, a GST Determination that outlines how the principles in Simplot apply more broadly. It clarifies:

• The definition of “food of a kind marketed generally as a prepared meal”
• Factors used to determine whether GST applies to meal components, even if sold separately

3. Updated ATO Detailed Food List (DFL)
To reflect this outcome, the ATO has issued an addendum to the Detailed Food List, aligning specific product categories with the guidance in GSTD 2025/1. This helps taxpayers identify whether their products fall into taxable or GST-free classifications based on packaging, marketing, and usage.

4. Withdrawal of GSTII FI3
The ATO has formally withdrawn GST Industry Issue FI3 on prepared food. The content in that issue has been either replaced or clarified in GSTD 2025/1 and the updated DFL.

What This Means for Food Businesses

If your business is involved in the manufacture, import, distribution, or retail of frozen or prepared foods, this ruling confirms that:

• GST applies to more than just obviously complete meals
• Individual meal components can also be taxable, depending on how they are packaged, marketed, and sold
• Relying on outdated GST classifications could result in underpayment or incorrect GST treatment

How Gavin M & Co Can Help

Our team assists food businesses, manufacturers, and wholesalers to:

• Review product classifications in line with the updated Detailed Food List
• Understand the implications of GSTD 2025/1 on your sales
• Update invoicing systems and pricing models to remain compliant
• Manage GST risks in the event of an audit or ATO review

With the GST landscape around food products growing more complex, it’s essential to work with experts who understand both the legal rulings and the commercial realities.

Speak With Us Today

Call: 03 9557 3138
Email: info@gavinmaandco.com.au
Website: www.gavinmaandco.com.au
Location: Australia – Nationwide Service