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The ATO has published a Decision Impact Statement in relation to the AAT decision in Luxottica Retail Australia Pty Ltd v FCT [2010] AATA 22; 2010 ATC 10-119; 75 ATR 169. The case concerned the GST treatment of the sale of spectacle frames at a discount conditional upon the purchase of a complete pair of prescription spectacles (without a discount for the lenses); and the issue of GST refunds.

The AAT preferred the view that there is one supply which could be described as a pair of spectacles comprising two components, the taxable frame and the GST-free lenses. On the basis that there was one supply, the AAT found that the relevant provision was s 9-80 of the GST Act. This is consistent with the Commissioner's approach based on GSTR 2008/1.

Under s 9-80 the value of the part of the actual supply that is a taxable supply is the proportion of the value of the actual supply that the taxable supply represents. Notwithstanding this, the taxpayer contended that the value of the frames should be its discounted price, with the effect that none of the discount is apportioned to the lenses. The AAT agreed.

The Commissioner has appealed the decision in respect of the application of s 9-80 to the value of the frames. In relation to s 105-65 (about refunds), the ATO accepts that the decision of the AAT was open on the facts as found by the AAT. Accordingly the ATO is not appealing that aspect of the decision and the Commissioner will shortly finalise ruling MT 2009/1 and will administer the law in accordance with that ruling.


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