A New Tax System (Goods and Services Tax) (Simplified Accounting Methods – Supermarket and Convenience Stores) Determination 2025

This instrument operates by authorising a simplified method of calculating input tax credits attributable to taxable acquisitions for eligible small supermarket and convenience-store retailers, thereby altering how their net GST liability for a tax period is presented on a GST return.

Key definitional levers and concepts in the instrument are:

• Eligible entity: An entity that is registered for GST throughout the tax period, that is a retailer mainly selling a supermarket/convenience-store range, that has GST turnover not exceeding $2 million, that is not mainly a fuel retailer, and that possesses "adequate point-of-sale equipment" throughout the tax period (s 6).

• Adequate point-of-sale equipment: Expressly defined in the instrument to mean equipment that can identify and record: a sale as GST-free or taxable; the total consideration for GST-free supplies in a specified period; and the total consideration for all goods in that specified period (s 4). The definition links the method to electronic or other POS capability able to produce the precise aggregates the steps require.

• The 5% receipt cap: The instrument imposes a quantitative test under s 6(c). During the tax period, less than 5% of the total consideration received for goods sold must be for goods that (i) are sold as a taxable supply; and (ii) consist of, or include, goods that were sold to the entity as a GST-free supply. That is a specific mixed-supply/importation-type threshold tied to the goods' origin as GST-free when purchased by the retailer.

• Two-part computation: The net amount is framed as "GST minus Input tax credits" (s 7(1)). The method for input tax credits is the instrument’s operative content. Steps 1-7 allocate input tax credits arising from acquisitions of goods within the supermarket/convenience range by using sales aggregates to compute a GST-free proportion, deriving a taxable-acquisitions proportion, and converting that to an input tax credits figure by applying the one-eleventh rule (s 7(1), steps 1-7). Step 8 then separately accounts for other input tax credits for creditable acquisitions and importations attributed under ss 29-10 and 29-15 of the Act (s 7(1), step 8). Step 9 adds the two figures (s 7(1), step 9).

• Exclusions from the simplified allocation: Section 7(3) lists goods that must be excluded from steps 1-7 and instead processed in step 8. The categories combine stock-type criteria (not held for sale in ordinary course) and assortment/volume criteria (not in the common range, held in substantially greater quantity/variety than is common) plus alcoholic beverages (s 7(3)).

• Adjustments: The net amount may be increased or decreased to account for adjustments for supplies or acquisitions/importations included in step 8 for the period (s 7(2)). In addition, if an entity later claims an input tax credit in a period after it used the simplified method, that earlier period’s net amount must be increased by the amount of that credit (s 7(4)).

The instrument depends on cross-references to the Act for certain operative terms, notably those listed in s 4 such as "retailer", "input tax credit", "GST turnover", "taxable supply", and the attribution rules in ss 29-10 and 29-15 of the Act (s 4). The prescribed method is procedural and arithmetic. Its application relies on the retailer producing total consideration figures for GST-free and total goods sales per tax period and reconciling those against total consideration for purchased goods according to the entity’s accounting basis (cash or non-cash), as set out in step 1 (s 7(1), step 1).

Primary affected actors

• Eligible retailers: The instrument targets small supermarket and convenience-store retailers whose annual GST turnover does not exceed $2 million and who "mainly sell" a range of food and other goods commonly sold at supermarkets or convenience stores, provided they are registered throughout the tax period and are not mainly fuel retailers (s 6). Such entities may opt into the simplified accounting method to compute their GST net amount.

• Business decision-maker: The entity itself decides whether to use the method; the instrument states an entity "may choose to use" it (s 6). The statutory criteria determine eligibility, but the election remains at the entity’s discretion under the instrument.

Secondary affected actors

• Suppliers to those retailers: The instrument affects how input tax credits on purchases from suppliers are allocated and claimed by the retailer. Suppliers themselves are not directly regulated by the instrument, but retailers’ purchasing and recordkeeping practices may change to supply the data required for steps 1-9.

• Bookkeepers and accountants: Practitioners working for affected retailers will need to implement the nine-step calculation, ensure POS systems provide the necessary aggregates, and handle the excluded categories that must be moved into step 8 (s 7(1)-(3)).

• Systems vendors: Vendors of point-of-sale equipment or invoicing systems are indirectly affected because the instrument requires "adequate point-of-sale equipment" that can distinguish and total GST-free and overall sales within a specified period (s 4). Retailers who lack such capability must upgrade or otherwise be ineligible.

Who does not qualify

• Larger retailers: Any retailer with GST turnover exceeding $2 million is excluded by the turnover cutoff in s 6(d).

• Fuel-focused retailers: The instrument bars retailers that "mainly sell fuel" from using the method (s 6(f)). The legislative text does not define "fuel" or "mainly sell", so the applicability will depend on factual characterisation and possibly further ATO interpretation.

• Businesses not registered throughout the period or without adequate POS equipment: The method is only available to entities registered for the entirety of the tax period and to those possessing the defined POS equipment during the period (ss 6(a), 6(e)).

Distributional note

• The instrument is optional: it does not require eligible entities to use the method; it permits a choice (s 6). Therefore only entities that assess the simplified method as beneficial will change behaviour. That creates a voluntary uptake dynamic: those with systems and accounting practices that can exploit the simplified arithmetic may adopt it, while those unable or unwilling to adjust will continue with standard attribution and input tax credit calculations under the Act.

Regulatory author

• The instrument is enacted by the Deputy Commissioner of Taxation and sits within the Commissioner’s delegated regulatory powers under the Act (s 3). That indicates the decision to design and limit this method is delegated administrative regulation rather than primary-legislative change.

Rights conferred by the instrument

• Right to choose the method: An entity that satisfies the eligibility conditions "may choose" to use the simplified accounting method for a tax period (s 6). That is a statutory right of election limited to qualifying entities and periods.

• Right to apply the prescribed arithmetic method: Once chosen, the entity has the right to compute input tax credits and the net GST amount according to the specified steps 1-9 in section 7(1). The instrument sets out a definitive compendious procedure for the input tax credits portion of the net amount.

Duties imposed on the entity

• Eligibility duty: The entity must meet all eligibility conditions for the tax period in question. These include being registered for the full tax period, being a retailer mainly selling a supermarket/convenience-store range, recording receipts such that less than 5% of total consideration is for taxable supplies consisting of goods that were purchased as GST-free supplies, having GST turnover at or below $2 million, possessing adequate POS equipment throughout the tax period, and not mainly selling fuel (s 6).

• Recordkeeping and computation duty: The entity must produce the sales and purchase aggregates necessary to execute steps 1-9. Step 1 differs by accounting basis: on a cash basis, total consideration provided during the tax period for purchased goods must be worked out; on a non-cash basis, total consideration for goods for which invoices were issued, or any part of the consideration provided, during the tax period must be worked out (s 7(1), step 1). Steps 2 and 3 require totals of GST-free sales and total sales. These are express statutory duties to compute and retain the figures for the calculation.

• Exclusion-duty for certain goods: The entity must not include certain classes of goods in steps 1-7; those excluded goods must instead be included in step 8 (s 7(3)). That is an operational duty to segregate acquisitions into the simplified allocation pool and the step 8 pool.

• Adjustment duty: The entity must adjust its net amount where there are adjustments for supplies or for acquisitions/importations included at step 8 for the period (s 7(2)). Additionally, if a later-period GST return not using the method includes an input tax credit for a purchase for an earlier tax period where the choice was in effect, the entity must increase that earlier tax period’s net amount by the amount of that credit (s 7(4)). These are explicit duties concerning post-period corrections or late claims.

Omissions in the instrument as to duties

• No procedural election mechanics: The instrument states an entity may choose to use the method but does not set out any procedural steps, timing, or notification requirements for making that election, nor does it prescribe an election form or retrospective effect. The entity therefore faces a duty to determine and comply with any external procedural requirements that may be in the Act or in Commissioner practice, which are not set out in this instrument.

Who enforces and what levers they have

• Enforcement rests with the statutory GST framework: The instrument integrates with the Act. It prescribes an alternative calculation method but does not itself create distinct enforcement powers or civil penalties. Liability for incorrect returns, failure to keep required records, or incorrect claims will be governed by the Act’s enforcement regime rather than by this instrument directly.

What the instrument itself prescribes

• The instrument does not specify offences, sanctions, penalty rates, or enforcement procedures. It is a determination that prescribes an accounting method and eligibility criteria (ss 6-7, Schedule 1). Consequently, any enforcement consequences flow from the Act, the entity’s GST returns, and the broader statutory compliance and audit mechanisms in the Act, rather than from the instrument setting separate penalties.

Implications for audit and assessment

• Use of the simplified method creates a particular audit trail and set of figures that are directly reproducible from the steps. An auditor or tax officer reviewing the entity’s return will be able to check steps 1-9 against the entity’s recorded totals (s 7(1), steps 1-9; s 4). Discrepancies between the method’s steps and source records would typically prompt inquiries, adjustments and potential assessments under the Act’s powers to amend GST returns and make assessments.

• Adjustments and subsequent-period interactions: Section 7(2) requires the net amount to be increased or decreased for adjustments to supplies or acquisitions/importations included in step 8. Section 7(4) requires increasing an earlier net amount if a later return claims an input tax credit that relates to a purchase for the earlier period where the simplified method was used. These provisions create discrete mechanics for adjustment that an assessing officer can verify and that may trigger amended assessments if the statutory adjustments are not observed.

Practical enforcement levers available under the Act

• Because the instrument operates within the Act, enforcement is likely to involve the Commissioner’s standard compliance tools including assessments, amendments, record-examination powers and, where applicable under the Act, penalties for false or misleading statements or failure to keep adequate records. The instrument’s silence on penalties means that any sanctioning would rely on those general Act provisions.

Risks of non-compliance with the instrument’s requirements

• Misuse of the method by ineligible entities, failure to exclude the goods listed in s 7(3), incorrect execution of the step-based arithmetic, or later claiming of input tax credits without appropriately amending earlier net amounts are specific factual and computational errors that would attract corrective assessments. The instrument makes precise arithmetic expectations; deviations will be identifiable.

Burden of proof and evidential considerations

• The instrument ties the method to POS-produced aggregates and to purchases characterised by accounting basis. Entities will need contemporaneous sales totals and purchase records to substantiate computations. Where the acquisition or supply characterisation is in dispute, the Act’s evidentiary and procedural provisions will determine how that dispute is resolved.

Direct cross-references to the GST Act

• The instrument is made under paragraph 123-5(1)(a) of the Act and repeatedly cross-references statutory concepts defined or governed by the Act. Section 4 expressly notes that several expressions used in the instrument are defined in section 195-1 of the Act, including "consideration", "GST-free", "GST return", "GST turnover", "input tax credit", "invoice", "net amount", "registered", "retailer", "simplified accounting method", "taxable supply", and "tax period" (s 4). That means the instrument’s operation is embedded in the Act’s terminology and substantive rules.

• Step 8 of the input tax credits calculation requires work under sections 29-10 and 29-15 of the Act to attribute "other creditable acquisitions and creditable importations" to the tax period (s 7(1), step 8). Those Act provisions will determine which acquisitions/importations are creditable and the attribution method to be used for them, so the instrument operates as an overlay to the Act’s existing attribution framework.

Implications for GST returns and statutory reporting

• The net amount produced by applying the instrument feeds into the GST return regime in the Act. The instrument does not alter reporting deadlines or the form of the GST return; it supplies an alternative arithmetic for determining the figures that must be reported as the net amount for the tax period. Any interaction with return lodgement rules, payment obligations, and assessment/amendment windows remains governed by the Act.

Interaction with recordkeeping and invoicing obligations

• The instrument implicitly heightens the practical importance of the Act’s recordkeeping and invoicing rules by requiring aggregates that must be supported by evidence. The definition of "adequate point-of-sale equipment" in s 4 requires the equipment to identify GST-free versus taxable sales and to produce period totals. Where the Act prescribes retention periods and invoice content, those requirements will be the underlying legal standard that supports the figures used under this determination.

Treatment of excluded goods and other tax regimes

• The instrument requires certain goods to be excluded from the simplified allocation and instead treated under step 8. The effect is to shift those goods into the broader creditable-acquisitions framework of the Act where the substantive rules in ss 29-10 and 29-15 apply. For example, alcoholic beverages must be excluded from the simplified allocation (s 7(3)(d)); their input tax credits will be dealt with under the Act’s general rules.

Scope limitations relative to other regulatory regimes

• The instrument is narrowly confined to GST computation and does not alter obligations in other tax or regulatory laws such as income tax, payroll tax, liquor licensing, fuel excise regimes, or consumer law. The exclusion of retailers that "mainly sell fuel" (s 6(f)) suggests the instrument should not be read to change any fuel-specific tax rules; it only removes such retailers from eligibility.

Gaps and dependency on the Act for operational detail

• The instrument does not specify notification, revocation, or election timing mechanics. It defers to the Act for the meaning of terms and for attribution of other creditable acquisitions. Practitioners must therefore apply the instrument in the context of the Act’s operational and procedural framework, because many practical and legal interactions are governed there.

Instrument provenance and immediate amendment

• This instrument is dated 4 September 2025 and signed by Ben Kelly, Deputy Commissioner of Taxation (front matter). It is made under paragraph 123-5(1)(a) of the Act (s 3). The instrument contains a Schedule that repeals the entirety of the A New Tax System (Goods and Services Tax) Act 1999 Simplified GST Accounting Methods Determination (No. 29) 2015 (Schedule 1). That is the only amendment action recorded within the instrument itself.

Commencement timing

• The commencement provision states that the whole of the instrument commences the day after the instrument is registered (s 2). The instrument contains a standard table setting out that commencement detail. No other staged commencements, transitional provisions or savings provisions are included.

What the instrument does not change

• The instrument does not purport to amend primary Act text. It operates as a determination under paragraph 123-5(1)(a). In other words, the instrument amends subordinate regulatory instruments by repealing the 2015 determination, but it does not purport to alter provisions of the Act itself. The only schedule amendment in the instrument is the repeal of the 2015 instrument (Schedule 1).

Scope for future amendment

• The instrument’s repeal of the 2015 determination is a clean repeal. The instrument itself is silent on whether transitional treatment is needed for entities that were using the earlier method. There is no express transitional clause preserving prior method computations or specifying how to move from the old determination to the new one. Entities need to note that the 2015 instrument is repealed in full by Schedule 1; the new instrument is the operative determination from its commencement date.

Document control and public editions

• The instrument’s commencement table contains a column 3 noted as not part of the instrument and stated that information may be inserted or edited in any published version. That is an administrative note and does not change the instrument content. No amendment history beyond the 2015-determination repeal is recorded in the instrument.

Instrument text and litigation record

• The instrument contains no case references and records no litigation history. It does not mention any court decisions, rulings, or public law challenges.

Implication for practitioners

• Because the instrument is new and the text does not cite any prior litigation or authoritative rulings, there is no statutory litigation history to rely on for interpreting ambiguous terms that appear in the instrument. Key interpretive phrases such as "mainly sells", "commonly sold at supermarkets or convenience stores", "substantially greater quantity or variety than is common", and "mainly sells fuel" are not defined in the instrument, and the instrument contains no cited decisions resolving such terms. Practitioners must therefore anticipate that early cases or tribunal rulings may be the first source of judicial interpretation should disputes arise.

Prudential approach where litigation silence exists

• In the absence of litigation precedents, reliance will be on the instrument’s wording, the linked Act provisions, and contemporaneous administrative statements or ATO practice. The instrument itself provides the arithmetic mechanics and eligibility criteria; disputes will centre on factual characterisation (for example, whether an entity "mainly" sells particular goods) and on the correct categorisation of supplies and acquisitions for the purposes of the step-based calculation.

Evidence record for possible contest

• Where classification disputes arise, the crucial evidence will be sales and purchase data and the retailer’s product mix and inventory patterns. The instrument mandates particular aggregates (s 7(1), steps 1-3) and explicit exclusions (s 7(3)); those same figures will underpin any litigated challenge about use or misuse of the method.

Ambiguities left unresolved in the instrument

• Undefined but operative terms: The instrument uses important qualitative thresholds without providing definitions. Phrases such as "mainly sells", "a range of food and other goods commonly sold at supermarkets or convenience stores", "substantially greater quantity or variety than is common", and "mainly sells fuel" will determine eligibility and exclusion, but the instrument does not define them. That creates interpretive risk for borderline retailers regarding whether they qualify under s 6 or must exclude certain goods under s 7(3).

• The 5% rule’s unusual formulation: Section 6(c) requires that less than 5% of total consideration received for goods sold during the tax period be for goods that are both sold as taxable supplies and that "consist of, or include, goods that were sold to the entity as a GST-free supply." This is a narrow mixed-supply-origin test. Practitioners should read the wording literally: it is not simply a 5% cap on taxable sales; it is a cap on taxable sales that are of goods the retailer bought as GST-free. Clarify on a client-by-client basis whether purchases were GST-free and whether those same goods are later sold as taxable supplies. Misreading this test will create eligibility errors under s 6(c).

Computational pitfalls

• Division by zero risk in step 4: The method directs dividing the result of step 2 (total consideration received for GST-free goods sold) by step 3 (total consideration received for all goods sold). The instrument does not address the contingency where step 3 equals zero. A tax period with zero gross sales would create an undefined ratio. Entities must be cautious; the instrument is silent on a remedy or alternative in such a scenario (s 7(1), steps 2-4).

• Accounting-basis differences: Step 1 varies by accounting basis. For cash basis entities, step 1 requires total consideration "provided" during the tax period for the goods purchased. For non-cash basis entities, step 1 requires total consideration for purchased goods "for which an invoice was issued, or any part of the consideration was provided, during the tax period" (s 7(1), step 1). Practitioners must apply the correct temporal test. Misclassification of purchases between periods or misapplication of invoice/date rules will misstate the allocation.

Recordkeeping and systems requirements

• POS capability requirement: The instrument requires "adequate point-of-sale equipment" to be possessed throughout the tax period. That equipment must identify GST-free versus taxable sales and produce totals per period (s 4). Entities whose systems lack such aggregating capability will be ineligible. Retrofitting or manual workarounds may generate audit risk, because the instrument’s method depends on accurate POS-derived totals.

Excluded goods practicalities

• Items to be excluded from steps 1-7 are not merely unusual or niche items. Alcoholic beverages are explicitly excluded and moved into the step 8 regime (s 7(3)(d)). Similarly, goods "not part of the range" or held "in substantially greater quantity or variety than is common" must be moved out of the simplified allocation (s 7(3)(b)-(c)). That requires retailers to maintain an evidence trail showing why specific stock is typical or atypical for their profile.

Timing and election mechanics gap

• The instrument says an entity "may choose" to use the method but does not specify the procedural mechanics for making that choice, whether it must be elected before the start of the period, can be applied retrospectively in a lodged return, or requires notice to the Commissioner (s 6). That silence is a practical "gotcha": entities cannot rely on the determination itself for the process to be followed and should not assume retrospective application is permitted.

Interactions with later-period ITC claims

• Section 7(4) requires that if, in a later period where the simplified method is not in effect, the entity takes into account an input tax credit for a purchase attributable to an earlier tax period where the simplified method was used, the entity must increase the earlier net amount by the amount of that credit. Failure to do so will leave a mismatch between returns and make the earlier period incorrect. Practically, firms must have controls to detect late claims and to amend/reconcile earlier periods.

Relevance of the repealed 2015 instrument

• The determination repeals the prior 2015 instrument in full (Schedule 1). If an entity previously relied on the 2015 method, it must not assume the same rules still apply. Because the new instrument differs in scope and specifics, transitional implications are a potential practical issue; the instrument itself provides no transitional instructions.

Pre-election checklist

1. Eligibility verification:

   • Confirm registration for the entire tax period intended to use the method (s 6(a)).
   • Confirm that the entity "mainly sells" a range of food and other goods commonly sold at supermarkets or convenience stores; document the product mix and proportion of sales by category (s 6(b)).
   • Ensure GST turnover does not exceed $2 million for the relevant period (s 6(d)).
   • Confirm the business is not a retailer that mainly sells fuel (s 6(f)).
   • Confirm that less than 5% of total consideration for goods sold in the tax period is for goods that are sold as taxable supplies and that consist of, or include, goods that were sold to the entity as GST-free supplies (s 6(c)). This requires tracing the input GST status of purchased items and the output GST status when sold.
   • Ensure possession of "adequate point-of-sale equipment" throughout the tax period; verify the POS can classify and total GST-free and total sales aggregates for specified periods (s 4; s 6(e)).

2. Systems and records:

   • Configure POS to produce period totals required by steps 2 and 3, and to tag sales as GST-free or taxable. Retain contemporaneous output showing totals.
   • Ensure purchase records allow total consideration for purchased goods to be extracted per accounting basis rules in step 1 (cash versus non-cash) (s 7(1), step 1).
   • Establish inventory classification procedures to identify goods falling into the exclusions in s 7(3) and ensure those goods are allocated to step 8.

Applying the nine-step computation for a tax period

• Step 1: Determine the total consideration provided during the tax period for the goods purchased on a cash basis, or the total consideration for goods for which invoices were issued or part consideration provided during the period on a non-cash basis (s 7(1), step 1).

• Step 2: Determine total consideration received for GST-free goods sold during the tax period (s 7(1), step 2).

• Step 3: Determine total consideration received for all goods sold during the tax period (s 7(1), step 3).

• Step 4: Divide step 2 by step 3 to get the GST-free sales proportion (s 7(1), step 4). Manage the zero-sales contingency; the instrument is silent on this but numerically dividing by zero must be avoided.

• Step 5: Multiply the step 4 result by the step 1 result to allocate the amount of purchases attributable to GST-free sales (s 7(1), step 5).

• Step 6: Subtract the step 5 result from the step 1 result to derive purchases attributable to taxable sales (s 7(1), step 6).

• Step 7: Multiply the step 6 result by 1/11 to derive input tax credits for those taxable-attributable purchases (s 7(1), step 7).

• Step 8: Compute the total input tax credits for all other creditable acquisitions and creditable importations attributable to the period under sections 29-10 and 29-15 of the Act (s 7(1), step 8). This is also where excluded goods from s 7(3) are to be included.

• Step 9: Add the step 7 and step 8 results to get total input tax credits for the period (s 7(1), step 9). The net amount is GST less this total input tax credits figure (s 7(1)).

Ongoing obligations and period-to-period controls

• Exclusion controls: Maintain a list and supporting evidence for goods excluded under s 7(3), including why stock is beyond common range or held in greater quantity. For alcoholic beverages, tag and separate purchases and sales explicitly.

• Adjustment controls: Maintain processes to detect and process adjustments for supplies and acquisitions/importations included in step 8 for the period, so the net amount is correctly increased or decreased as required by s 7(2).

• Late-claim detection: Put in place a control to flag input tax credit claims in later periods that relate to purchases in earlier periods where the simplified method was used, so the earlier net amount can be increased in line with s 7(4).

Documentation to retain

• POS aggregate outputs showing total GST-free sales and total sales per tax period (s 4; s 7(1), steps 2-3).

• Purchase registers reconciled to step 1 computations, showing which purchases are included in steps 1-7 and which are diverted to step 8 (s 7(1), step 1; s 7(3)).

• Evidence supporting any qualitative determinations such as "mainly sells", "commonly sold", and whether a retailer "mainly sells fuel" (s 6(b), s 6(f), s 7(3)).

Practical choices and testing

• Model comparison: Before electing the method, run both the simplified method and the standard attribution method for a representative prior tax period to compare net amounts, cash-flow timing, and compliance cost. Use that analysis to decide whether the simplified method produces materially different outcomes or creates administrative savings.

• Systems testing: Confirm POS systems generate the required aggregates automatically and that the accounting system can segregate excluded goods. Manual workarounds increase auditing risk.

Election mechanics note

• The instrument does not prescribe the form, timing, or notification procedure for electing to use the method. Entities must therefore document their internal election decision, keep supporting records demonstrating eligibility for the period, and be prepared to justify their choice to an examiner.