The curious reason why this Easter treat is GST exempt!

We all love a good Hot Cross Bun at Easter time but did you know they are GST free? Let Gareth explain why…

In the lead up to the 1993 federal election, the seemingly simple question of GST and cakes is famously thought to have turned an ‘unlosable’ election. Now that GST has been with us for nearly 20 years, you might think the complications of GST and baked savouries is a thing of the past. However, a regular Thursday trip to the bakery and an equally simple question revealed that although the issue is understood, it certainly isn’t simple.

Every Thursday there is a tradition in our office to venture to the local and very popular Vietnamese Bakery for a roll. I am however have a less sophisticated palate and typically visit Bakers Delight instead. I ordered my routine Thursday lunch of a Pizza roll and a delicious and traditional hot cross bun.

When my ordered popped onto the screen I noticed something that left me confused. The total included an amount of GST but it was not against the total of my order. There had only been tax applied to the Pizza roll and not the hot cross bun. Confused, I asked the person assisting me with my order the reason for the difference between the two. They, like me, was very confused and promised an answer the following week. I left them alone at this point, eager to receive the answer next week.

In the following week I began my research and confirmed that bread products were a GST exempt food which left me to assume that both of these items should be free from GST. I continued digging and it revealed that the GST exemption does not apply to bread items with a sweet coating or filling. This meant that the Hot Cross Bun should be the one subject to GST and the pizza roll would be the exempt. This investigation left me further confused and I decided to just get back to work.

A week full of anticipation finally passed and Thursday arrived. I gleefully ventured to the bakery and made sure to lock eyes with the server who promised me an answer. It was magical. Once my traditional order went through I asked eagerly for my answer. She had sent the query to one of the high up managers who eventually was able to get a final answer. Finally. Apparently, because the pizza roll was made from dough and had toppings on it this was subject to GST. However, there was still the matter of the Hot Cross Bun. This has been treated as a GST exempt as there is a specific exemption for items that are glazed rather than iced and the Cross portion does not contain enough sugar to be considered icing.

So this Easter, enjoy a toasted Hot cross bun with your preferred topping, safe in the knowledge that this festive treat is 10% less than a pizza roll. If you need assistance with any of your GST related dramas, feel free to get into contact with us and we would be happy to help you out.

We hope all of our staff and clients have a fantastic Easter break and if you have any queries for Gareth or our dedicated Tax Specialists, please complete your details below and we’ll be in touch or give us a call on 03 9835 8200.

About the Author
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Gareth Livingston
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