Beginners Guide: Example To Understand Gst And Tax-free Items

Sarah runs a small bakery selling sandwiches, cakes, hot foods, and drinks. She charges her customers an extra 10% to cover the GST. For example, she sells salad sandwiches for $5.50 including GST. She keeps $5 and sends the GST amount of 50 cents to the ATO when she fills in her next BAS.

Not everything Sarah sells in her bakery will attract GST. Here are some examples of basic food she sells that is ‘GSTfree’ (no GST is charged):

  • bread and bread rolls without icing n bottled drinking water
  • fruit juice containing at least 90% by volume of juice n milk.

Here are some examples of food she sells that does have GST (‘taxable sales’):

  • sandwiches n cakes, slices, pastries, pies and sausage rolls n soft drinks and flavored milk
  • platters of prepared food.

If Sarah is not sure, she checks the ATO’s English publication GST food guide (NAT 3338).

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