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On 19 April 2011, the ATO issued a Decision Impact Statement in relation to the Full Federal Court decisioin in FCT v Luxottica Retail Australia Pty Ltd [2011] FCAFC 20; 2011 ATC 20-243. The case concerned the calculation of the taxable value of spectacle frames when sold at a discounted price conditional upon the purchase of a complete pair of prescription spectacles (including GST-free lenses).

The Court held that the sale of spectacles was a single supply, as contended for by the Commissioner. However,the question of how to calculate the value of the taxable supply upon which GST is payable remained. The Court held that the value of the taxable supply of frames must be determined under s 9-80, not s 9-75.

However, the Court held that an element of the formula in s 9-80, the taxable proportion, used to work out the value of a taxable supply for supplies that are partly taxable and partly either GST-free or input taxed, is circular and therefore does not work. The Court therefore held that the apportionment must be undertaken as a matter of practical commonsense.

The Decision Impact Statement states that the Commissioner "respectfully accepts that it was open to their Honours to conclude that the apportionment adopted by the taxpayers was a reasonable basis of apportionment in the circumstances as found by the Tribunal. Accordingly, the Commissioner will not seek special leave to appeal to the High Court against the decision of the Full Federal Court."


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