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Fair and reasonable principles of apportionment

Last updated 12 July 2023

The methodology you use to determine the amounts of GST credits that can be claimed must be one that is fair and reasonable. It must reflect the use (or intended use) of acquisitions (resources acquired) in making input taxed supplies and other supplies.

Many businesses find it difficult to accurately determine the actual usage of acquisitions and therefore need a methodology to measure it. This information will help you identify and evaluate methods that are fair and reasonable in your circumstances, as well as document your decisions and reasoning on your choice of method.

There may be more than one method that is fair and reasonable and that suits your business. The GST law does not prescribe any particular method.

We accept that you would in general seek to:

  • claim the maximum amount of GST credits that are fairly and reasonably claimable
  • reasonably minimise the costs of calculating the amounts claimable.

This information will provide you with some general guidelines on how to identify and choose a methodology that is fair and reasonable.

We encourage you to adequately document the reasons for making choices that meet the principle of being fair and reasonable and keep sufficient information to support your decisions. Creating and maintaining these documents will contribute to your own internal risk management and governance processes and also assist you by reducing the risk of a protracted enquiry and possible dispute with us.