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  • Sales percentage method

    If you use this method, you examine the total sales in each tax period and work out the GST-free percentage of your total sales. You then apply this percentage to your purchases (trading stock only) for the tax period to estimate your GST-free purchases.

    The sales percentage method assumes that if you only resell goods that you purchase, the percentage of your GST-free sales will be similar to the percentage of your GST-free purchases.

    You can use this method if you meet all of the following conditions:

    • GST registration: Required
    • Required transactions: Sell both taxable and GST-free food
    • Turnover threshold: GST turnover of $2 million or less
    • Point-of-sale equipment: Adequate
    • Nature of business: Reseller, or converter whose conversions are 5% or less of total sales. Designed for supermarkets and convenience stores. Not available to petrol stations.

    For example, if you sell 95% of your products in an unchanged form but 5% of your sales are from taxable sandwiches (which you make using GST-free bread and ingredients), you are eligible to use this method.

    Example: Sales percentage method

    Anita owns a small supermarket. She resells most of her goods and converts only about 2% of items into taxable sales (mostly cooked chickens). She decides to use the sales percentage method to calculate her GST.

    In a quarterly tax period, Anita works out has a total of $200,000 in trading stock sales. Her records from point-of-sale equipment indicate the total amount of GST-free sales is $60,000. She has a total of $100,000 for trading stock purchases for the period.

    Step 1 Total sales



    Step 2 Total GST-free sales



    Step 3 Percentage of GST-free sales
    ($60,000 ÷ $200,000 × 100)



    Step 4 Total GST-free purchases
    ($100,000 × 30%)



    Anita has to do the above calculation every tax period using this method.

    End of example

    See also:

      Last modified: 30 May 2017QC 16262