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By: Anika Reside
01 Aug 2025 4 min read
This includes:
While these documents provide helpful guidance, they also expose significant inconsistencies – particularly in the GST treatment of salads.
The Federal Court in Simplot considered whether certain frozen food products were “food of a kind marketed as a prepared meal.” The Court applied a test based on common sense and common experience, focusing on three key attributes:
Despite this seemingly practical approach, the Court acknowledged the legislative framework is arbitrary and incoherent, with exemptions that defy logic – such as soup being GST-free, while frozen Irish stew is taxable.
The ATO’s Determination and updated Detailed Food List apply the Simplot principles to salads, but the outcomes are perplexing:
| Salad type | GST status | Ingredients |
|---|---|---|
|
Caesar salad
|
Taxable
|
Any combination of lettuce, croutons, parmesan cheese, bacon, chicken, egg and dressing.
|
|
Greek salad
|
Taxable
|
Any combination of tomato, cucumber, onion, capsicum, olives, fetta, lettuce and dressing.
|
|
Potato salad
|
GST-free
|
Potatoes and dressing; may also include bacon, egg, celery, capsicum; or spring onions, chives or similar garnishes.
|
|
Pasta salad
|
GST-free
|
Pasta and mayonnaise dressing; may also include carrot, celery, capsicum; or spring onion, parsley or similar garnishes.
|
|
Coleslaw
|
GST-free
|
Mainly cabbage, with or without dressing.
|
|
Tabbouleh
|
GST-free
|
Parsley, bulgur wheat (or similar), tomatoes, mint, onion and dressing.
|
|
Seafood salad
|
GST-free
|
Seafood extender, prawns, celery and dressing.
|
The result? A salad with bacon and egg is taxable if it’s called Caesar, but GST-free if it’s called Potato. A Greek salad with tomato and onion is taxable, while a tabbouleh with similar ingredients is not.
The ATO’s four-step method prioritises the Detailed Food List over the Determination’s nuanced analysis. This creates uncertainty:
A transitional compliance approach applies until 31 December 2025, offering relief for certain products – provided suppliers don’t retrospectively claim input tax credits or exploit the guidance.
The ATO has made a genuine effort to clarify a complex area of law. However, the GST treatment of salads reveals a system that is ripe for reform. Until then, suppliers must navigate a landscape where lettuce is taxable and potato isn’t, and where the name of a salad can cost you 10 per cent.
Please contact one of our GST specialists if you need assistance with navigating the recent ATO guidance in advance of the 31 December 2025 deadline.
Article contributed by Natalie Lu - Indirect Tax
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