| GST on Credit Card Surcharge |
| If a merchant now imposes a surcharge when a customer using a credit card, is GST applicable? |
It would seem to be debatable whether the extra fee charged by the merchant, is a financial supply and not subject to GST. However, the Australian Taxation Office (ATO) considers that it is part of the price for the merchant?s supply of the goods or services. Accordingly, the merchant will be required to remit 1/11 of the total price.
The ATO logic is that if the price tag indicates a price, say of $50 inclusive of GST, and when payment is tendered the customer chooses to pay the surcharge of say 3%, the new price for the item is $56.65. The ATO consider that this is one supply only and therefore, GST is payable in respect of the total amount. It also means that an input tax credit is claimable on 1/11 of the total if the card holder is purchasing for business purposes.
11th-November-2003 |
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