GST and apportioning the consideration for a supply

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

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)?

Yes

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.

A New Tax System (Goods and Services Tax) Act 1999 section 9-80