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24 Jul 07 GST payable on promotional items - Food Supplier

The AAT (Downes J, President) has held that promotional items supplied by the taxpayer with GST-free food items were supplied for consideration and were therefore subject to GST.

The promotional items were packaged with the food. They were branded with the taxpayer’s name. They were marked as "free". The combined packages were sold for the same price as the food alone. The taxpayer argued that supply of the items to its retail customers was not for consideration and, because the food component was GST-free, no GST was payable. The AAT rejected the taxpayer's argument, holding that the supplies of the packaged products were supplies for consideration. The promotion items were part of each supply. Each supply was partly subject to GST. This was because there was consideration for the supply as a whole, including the promotional item: Food Supplier and FCT [2007] AATA 1550 (AAT, Downes J, President, 16 July 2007).

For a copy of the decision, go here

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