Crackers or bread?
1. Lansell House Pty Ltd challenged the Australian Taxation Office (ATO) ruling because the ATO classified its product, the Mini Ciabatte, as crackers rather than breads. This meant the product was subject to the GST.
2. The GST legislation states that “food” items for human consumption are GST-free, except ifthey are one of the listed exceptions or “food that is, or consists principally of, biscuits, cookies, crackers, pretzels, cones or wafers.” Examples of foods that are GST-free in the ATO’s GST Food Guide include “bread and rolls (no icing or filling); focaccia, plain or herb; Grissini (bread sticks); and Italian bread.”
3. Justice Sundberg dismissed the application explaining that words in a statute must be given their ordinary meaning. He considered the view of an ordinary person as to the nature of the product and whether or not the product falls into the category of biscuit. Justice Sundberg pointed out that it can be difficult to determine whether a product falls into one category or another. Dictionaries do not provide an absolute definition. Justice Sundberg believed that the Mini Ciabatte was a cracker because its ingredients were substantially the same as those of a cracker. The product had the same use and supermarkets displayed it, treated it and sold it as a cracker or with crackers and biscuits. There were a number of other similarities to crackers.
4. Student responses will vary. However, students may suggest that the judge in the Lansell House case attempted to give a more up-to-date or specific meaning to the words ‘bread’ and ‘cracker’ in the GST legislation. Through statutory interpretation, courts can either narrow or widen the scope of what legislation made by parliament covers. However, no absolute definition could be provided for ‘cracker’ or ‘bread’ in this case because they overlapped too significantly, and needed to bedistinguished on a case-by-case basis.