GST and apportionment in complex transactions.

For the purposes of the goods and services tax, a transaction which would be regarded, in a practical business sense, as a single supply of goods or services may be comprised of several components, some of which are taxable and some not. Following a commercial approach, Australian courts have resolved the questions of identification and characterisation of supply by examining a transaction/supply from a business and commonsense perspective, paying due deference to the legal realities. Where the supply has “separately identifiable parts” and none are integral, ancillary or incidental, an apportionment exercise will be necessary between the taxable and non-taxable parts of the supply. As with Luxottica, an apportionment will be necessary where there is a single supply but one or more parts are taxable, while others are non-taxable. It is likely that the appropriate method of apportionment will be one that is reasonable and supportable in the particular circumstances, having regard to the commercial and legal context in which the transaction occurs. [ABSTRACT FROM AUTHOR]