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28 Feb 1111 Commissioner's appeal over spectacles dismissed -Luxottica

The Full Federal Court (Ryan, Stone and Jagot JJ) has dismissed the Commissioner's appeal against the decision of the AAT in Luxottica Retail Australia Pty Limited and FCT [2010] AATA 22, which ruled on the GST payable on the sale of spectacles.

The spectacles comprised taxable frames and GST-free prescription lenses. The price of the frames (but not the lenses) was discounted when purchased in conjunction with the supply of prescription lenses, but not otherwise. The issue for decision was how the discount was to be treated for GST purposes. The AAT agreed with the Commissioner that there was a single supply of "spectacles" to a customer. However, the Commissioner's contention that, for GST purposes, the discount allowed to the customer should be apportioned between the frame and the lenses was rejected by the AAT. The AAT held that the discount was wholly attributable to the frames.

The Full Court agreed with the AAT, noting that the formula in s 9-80(2) of the GST Act, which was intended to apply in this situation, "cannot be made to work". The Full Court held that the AAT "made a considered decision as to the value of the taxable supply based on findings of fact that it was entitled to make": FCT v Luxottica Retail Australia Pty Ltd [2011] FCAFC 20 (Full Federal Court; Ryan, Stone and Jagot JJ; 23 February 2011).


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