Salad days are over as the taxman cometh

The Australian Taxation Office is reviewing goods and services tax rules for what constitutes a salad.

Waitress Olivia Kingston with Cook & Archies cafe co-owner Steve Manakas in Sydney’s inner-city Surry Hills. Picture: Hollie Adams.

It’s shaping as the messiest food fight since then Liberal Party ­opposition leader John Hewson choked on a birthday cake (and subsequently lost the “unlosable election” of 1993) in trying to explain to Mike Willesee on A Current Affair whether it would cost more or less under a GST.

The Australian Taxation Office has opened the fridge to a similar battle, telling a Senate committee on Wednesday it was ­reviewing GST rules for salad and was working with industry on new guidelines and a definition.
“Some may define it as a bowl of lettuce, some may define it as a barbecue chicken shredded up with three grains of rice on it,” ATO deputy Timothy Dyce said.

As it stands for GST purposes, the ATO says “Salads, including pasta, rice, coleslaw, meat, seafood and green salad, sold from salad bars at supermarkets in either the delicatessen section or from a self-serve bar, are GST-free only if they are not marketed as prepared meals.”

It’s a soggy definition that does need mixing up, but tax expert and deputy vice-chancellor of Swinburne University Duncan Bentley said the ATO should have the tongs out ready to be served a salad backlash and a little dressing down. “Under the current system, as soon as you’ve got a definition, people are trying to game it,” Professor Bentley said.

“Everybody’s going to play havoc with it, trying to get around the definition by doing whatever it takes to create things which are going to give them an advantage.

“It’s a bit like capital gains tax rules and the various exemptions there; whenever you get close to the boundary, people are going to game it as much as possible.”

However, Professor Bentley said while defining a salad shouldn’t be too hard, policing that definition was essential. “Whether it’s prepared or unprepared, what is fresh food? What has an element of preparation in it?

“These are the questions they have to ask,” he said.

“They will have to have a definition which includes foods that most reasonable people would think would be in salad.

“When the GST came in, there was a great debate around some definitions … the tax office was on a hiding to nothing and was always going to look a bit stupid,” Professor Bentley said.

“And people will laugh at the tax office for policing their salad definition but they must to stop restaurants and cafes crossing the line.”

Steve and Vicky Manakas, who have owned Cook & Archies cafe in Sydney’s Surry Hills for 11 years, say defining a salad won’t be easy.

“How are they going to do it, whether or not it’s cut up? Fruit doesn’t have a GST but a fruit salad does,” Mr Manakas said.

Ms Manakas said they already absorbed credit-card charges and a salad GST would make it harder for customers and the business.

She dismissed the notion that a bit of chicken on rice was salad.

“A good salad is almost like a meal. How can you define it? I don’t know,” she said.