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Edited version of private advice
Authorisation Number: 1052001413378
Date of advice: 13 July 2022
Ruling
Subject: GST and apportioning the consideration for a supply
Question
Is your proposed methodology for apportioning the consideration that you receive for your mixed supplies fair and reasonable for the purposes of determining the taxable portion pursuant to section 9-80 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes
Relevant facts and circumstances
You are registered for GST carrying on an enterprise of supplying goods.
Customers can purchase the goods individually or a bundle of goods (bundle).
When a customer purchases a bundle, a discount is given on the total price.
You make a mixed supply if the bundle consists of taxable and GST-free goods.
You are proposing a methodology for apportioning the consideration that you receive for a mixed supply of a bundle. Under the methodology, you will apply the discount across all goods included in the bundle.
The apportioned price of an item in the bundle = regular price of the item divided by the total regular price of all the items in the bundle multiplied by the discounted price of the bundle.
Table 1: Apportioned discount bundle price example
|
Item |
Regular price ($) |
Apportioned discounted bundle price ($) |
|
Item 1 |
15.00 |
11.54 |
|
Item 2 |
13.00 |
10.00 |
|
Item 3 |
14.00 |
10.77 |
|
Item 4 |
12.00 |
9.23 |
|
Item 5 |
11.00 |
8.46 |
|
Total regular price |
65.00 |
|
|
Bundle price |
|
50.00 |
|
Discount given |
15.00 |
|
Where item 1 in the above example is taxable, the GST payable on the item is $1.05 ($11.54 ÷ 11). The GST payable on the supply of the bundle is the aggregate of the GST amount payable on the taxable items in the bundle.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-80