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GST for beginners No 1: the bakery. GST on bakery products [transcript of Today Program, 30 March 2000]

GST For Beginners No 1: The Bakery


GST On Bakery Products


Simon Crean - Shadow Treasurer


Media Statement - 31 March 2000


E & OE - Proof Only


Transcript Of Today Program - 30 March 2000


GRIMSHAW: And now to the GST, and there's been much discussion in recent days about its impact on petrol prices, but when it comes to its effect on business, spare a thought for your local bakery. Like his colleagues, Trevor Morgan faces a mountain of complications and rising costs to prepare for the July 1st deadline, and Trevor Morgan joins us now. Trevor good morning.


MORGAN: Good morning.


GRIMSHAW: Are you ready for the GST?


MORGAN: I hope so, like anyone else, but we've tried very hard over a period of time. We've done a lot of research on it. We haven't, to coin a phrase, we haven't buried our head in a bucket of flour, we've looked at the thing.


GRIMSHAW: Alright. Okay, now I guess most of us in thinking about the complications of the GST probably haven't spared a thought for the local baker because bread is GST free.


MORGAN: That's right.


GRIMSHAW: But what percentage of your products will attract a GST?


MORGAN: Well there is a considerable percentage that people don't realise. I've got a couple of examples sitting in front of me at the moment. This one here is GST free. Sitting beside it, not GST free, it's got a few cracked pepper and things on it. Two little buns here, that's subject to GST, that's not subject to GST. Another one here...


GRIMSHAW: What's the difference between the two little buns? One's iced and one's...


MORGAN: One's iced and one's not.




MORGAN: So you pay the GST on this one, exactly the same bun, un-iced, no GST.


GRIMSHAW: But the other bun's got raisins. Now the raisins aren't bread but they don't attract a GST?


MORGAN: That's providing there's no addition of glaze, no you can glaze them on top but you can't ice them.


GRIMSHAW: And are raisin, the raisins are not, they don't attract a GST?


MORGAN: They don't. If I put a bit of apple in there, it is subject to GST.


GRIMSHAW: Okay so how are raisins different to say sesame seeds or poppy seeds on the other loaf?


MORGAN: Well sesame seed and poppy seed are not GST, but you would find a cracked wheat, probably an example behind me here. That is a cracked wheat, that is subject to GST.




MORGAN: If that didn't have cracked wheat, it's not subject to GST.


GRIMSHAW: Okay so the cracked…but so how… I mean this must be terribly confusing to you. You have...


MORGAN: I think I've got, I think I've got a few more grey hairs out of it.


GRIMSHAW: So this is, and the distinction here is, now correct me if I'm wrong, because I'm trying to wade through it too, so is the rest of the country. Is ah, that food in production attracts a GST, but food for human consumption doesn't. Is that right?


MORGAN: That's right.


GRIMSHAW: Okay, so if you put cracked pepper on your Turkish loaf, that's food in production. Is it?


MORGAN: That's right. It's additional production therefore it's subject to GST.


GRIMSHAW: So do you pay GST on the cracked pepper that you buy, or is it food for human consumption by the time you've bought it?


MORGAN: Well I'm at the moment, I'm getting it tax free.


GRIMSHAW: Yes. After July the 1st?


MORGAN: That's right. I don't know. I'm not that good.


GRIMSHAW: Because after July 1st you might well be paying a GST on your cracked pepper, then you'll have to claim it back so it's effectively revenue neutral, then you stick it on your Turkish bread and then suddenly it attracts a GST.


MORGAN: That's right.


GRIMSHAW: And now...


MORGAN: It gives me something to do at night, the late nights to work all the little sums out.


GRIMSHAW: You've invested $15,000 on infrastructure to cope with the GST. Is that going to sort out some of these accountancy problems for you?


MORGAN: It sorts out the retail accountancy problems. So it sorts out, we employ a lot of staff, we have a café here as well. It sorts out, to a degree, what's going through. I have the old cash register behind me which unfortunately they haven't got the facilities to do it. This type of cash register has got the facilities to sort out the particular items that are subject to GST without the operator's knowledge.


GRIMSHAW: Well good luck to you. It sounds like a headache but thanks for joining us this morning.


MORGAN: Thank you very much.




Authorised by Gary Gray, 19 National Circuit, Barton ACT 2600.