ATO to decide on definition of a salad in “rapidly moving” fresh food landscape

The Australian Taxation Office has faced a rough start to 2017 as it continues to piece together the cause of a system-wide outage last December, but it has another key priority on the go — the definition of a salad.

Australian Taxation Office deputy Timothy Dyce appeared before a Senate Committee on Wednesday and one of the topics of conversation was the tax office’s consultation with the food industry on what types of salads should be exempted from the goods and services tax (GST).

The discussion centred around how fresh-food based salad products are being marketed and whether the big supermarket chains and salad bars needed to apply GST to their products.

“It depends what you define a salad as,” Dyce said.

“Some may define it as a bowl of lettuce, some may define it as a barbecue chicken shredded up with three grains of rice on it.”

Dyce said the ATO is consulting with businesses to review the GST guidelines and is “looking at whether the guidelines still reflect the very rapidly moving nature of salads and these types of products in the market”.

When the GST was introduced in 2000, exemptions were put in place for fresh food items, including salads.

Weighing in on the discussion, ATO commissioner Chris Jordan wondered whether the example was “going down the birthday cake path”, referencing former Liberal-opposition Party Leader John Hewson’s stumble in a TV interview in 1993 over whether a birthday cake would cost more or less with a goods and services tax.

Jordan told the Senate Estimates Committee he would look at a receipt next time he ordered a salad in Sydney to see whether the proprietor was charging GST.

While it may be some time before the ATO lands on a definition, salad bars SmartCompany spoke to this morning said they already applied the tax to at least some of their pre-packaged options.

For example, Melbourne-based cafe business Bluebag offers grab-and-go salads and a range of catering options, and says it currently applies GST both to the “make your own” salad products and its pre-packaged salad meals.

According to David McKellar from Allied Accountants, the conversations shows Australia’s “ever-evolving tax system”.

“The tax system needs to evolve [with society],” he told SmartCompany.

“As things progress and change, we need to review things.”

McKellar says there have always been some areas of contention with the GST, like whether feminine hygiene products should be exempted, but it’s not just in the area of leafy greens that tax law might lag behind or need review.

“Take the sharing economy and the recent talk about the GST,” says McKellar.

However, any decisions to change definitions will likely be taken very carefully, he believes.

“As soon as you have exemptions, it provides enormous complications.”

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