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GST on Costco Membership

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Costco charged membership fee of $55.00, but on the invoice, it clearly states that EXCL GST: $51.77, and GST $3.23.

 

Why don't they charge GST as 10%, but instead 6.46%?

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ATO Certified

Community Support

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Hi @SWang,

 

Thanks for your patience whilst we checked information with a specialist area.

 

There are situations where the GST payable shown on a tax invoice may be less than 1/11 of the price. This may happen for example when the supplier makes a supply that is partly taxable and partly GST-free (this is called a mixed supply). In this situation GST is only payable on the taxable part/component of the supply.  That is, 10% GST is only charged on the taxable part of the supply. By way of an example, a supplier makes a mixed supply as follows:

 

Supply                  Value                    GST                         Price

GST-free part             $22                        $0                           $22
Taxable part               $30                        $3 ($30X10%)        $33

Total price                                                                              $55

 

In this example the GST payable on the supply is $3 which is less than 10% of the total value of the supply of $52 and less than 1/11 of the total price of $55.

 

You should contact the supplier for an explanation on how the GST amount on the membership fee is calculated. 

 

Hope this helps, JodieH.

4 REPLIES 4

Community Support

Replies 0

Hi @SWang,

 

Welcome to our Community!

 

We're checking in with a specialist area to see if they can provide further information regarding your query. We'll get back to you as soon as possible.

 

Thanks, JodieH.

Best answer

ATO Certified

Community Support

Replies 1

Hi @SWang,

 

Thanks for your patience whilst we checked information with a specialist area.

 

There are situations where the GST payable shown on a tax invoice may be less than 1/11 of the price. This may happen for example when the supplier makes a supply that is partly taxable and partly GST-free (this is called a mixed supply). In this situation GST is only payable on the taxable part/component of the supply.  That is, 10% GST is only charged on the taxable part of the supply. By way of an example, a supplier makes a mixed supply as follows:

 

Supply                  Value                    GST                         Price

GST-free part             $22                        $0                           $22
Taxable part               $30                        $3 ($30X10%)        $33

Total price                                                                              $55

 

In this example the GST payable on the supply is $3 which is less than 10% of the total value of the supply of $52 and less than 1/11 of the total price of $55.

 

You should contact the supplier for an explanation on how the GST amount on the membership fee is calculated. 

 

Hope this helps, JodieH.

Newbie

Replies 0

Hi Jodie,

 

Yes, I understand all your points. But I think you are missing the key point. Unless Cosco has a special tax rulling, I think they are under charging GST to customers. However, I can't find this tax ruling! 

 

If ATO has not provided this special Tax Rulling, shouldn't ATO investigate?

 

Thanks Smiley Happy

SWang

Community Support

Replies 0

 Hi @SWang,

 

Costco are charging 10% on the taxable part of their membership fee, the whole $55 is not taxable. Therefore they are not require to charge GST on the full $55.

 

Check out the paragraph under partly taxable sales.

 

Thanks for posting.

 

KylieS

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