GST is worked out on the price you actually charge, not the price on the tag. A discount given at the point of sale simply means GST on the discounted amount: 1/11 of what the customer pays. A discount, rebate or refund that arrives after you've already reported the sale is an adjustment event: the supplier makes a decreasing adjustment on the BAS for the period the price changed, a GST-registered customer who claimed the credit makes a matching increasing adjustment, and whenever the GST moves by more than $75 the paperwork is an adjustment note. Rebates paid straight to an end customer further down the chain follow the third-party payment rules, and a free coupon or promo code isn't a voucher: it just lowers the price.
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The rule: GST follows the money, not the tag
GST is a tax on consideration: the amount the customer actually hands over. So a discount given at the moment of sale needs no special treatment at all: a $110 item sold at 10% off goes through the till at $99, the GST is 1/11 of $99, which is $9, and the tax invoice shows the discounted figures. There's no rule that drags the GST back up to the undiscounted price, because the undiscounted price was never anything but a number on a tag. The same logic runs your $75,000 threshold: GST turnover counts sales at the prices you actually charged, so genuine discounting genuinely reduces it, unlike a marketplace's seller fee, which is your expense coming out afterwards, not a discount on your sale.
The complications all live on one axis: timing. A price that changes before you report the sale is just the price. A price that changes after you've reported it is an adjustment event, and the GST system has a tidy, slightly bureaucratic machine for those. Here's the whole landscape at a glance.
| What happened | What the GST does |
|---|---|
| Discount at the point of sale: 10% off, a haggled price, a sale rack | Nothing special: GST is 1/11 of the discounted price |
| Early-payment or settlement discount taken after you invoiced | Adjustment event: report the net figure if it's the same tax period, make a decreasing adjustment if you'd already reported |
| Volume rebate paid to a customer at the end of the quarter or year | Adjustment event: decreasing adjustment for you, increasing adjustment for the GST-registered customer who claimed credits |
| Manufacturer cashback paid straight to the end customer, skipping the retailer | Third-party payment: the payer claims a decreasing adjustment, with its own adjustment-note rules |
| Free "10% off" coupon or promo code redeemed at checkout | Just a discount: GST on the price actually paid |
| Gift card or voucher with a stated dollar value | Not a discount: GST waits for redemption, under the voucher rules |
Discounts after you've reported the sale: adjustment events
Settlement discounts, prompt-payment discounts, renegotiated prices, end-of-period rebates: the ATO's list of adjustment events is exactly this territory: the price of a sale or purchase changes after the event. The mechanics depend on where your BAS is. If the discount lands in the same tax period you report the sale, there's no adjustment at all: you report the net price in the first place and move on. If you've already reported the sale, you make a decreasing adjustment (the difference between the GST you reported and the GST on the new price) on the BAS for the period the discount happened. Invoice $1,100 in Q1, report $100 of GST, agree $110 off in Q2: the price is now $990, the GST is now $90, and Q2's BAS carries a $10 decreasing adjustment. The Q1 BAS was right when you lodged it, so it never gets touched: this is an adjustment, not a mistake, and none of the correction limits apply.
The same event has a mirror image on the other side of the invoice. A GST-registered customer who claimed a credit on the purchase in an earlier period makes an increasing adjustment for the GST portion of the discount or rebate they received: a $2,200 volume rebate on taxable stock hands back $200 of credits. On a cash basis the adjustment generally belongs to the period the money actually moves; on accruals, the period you become aware the price changed. Either way the principle holds: the two ends of one price change stay equal and opposite, which is precisely what the paperwork in the next section exists to keep straight.
Adjustment notes: the $75 line and the 28 days
An adjustment note is to a price change what a tax invoice is to a sale: the document that makes the claim real. Before you can claim a decreasing adjustment you must hold a valid adjustment note, with one generous exception: no note is needed when the GST moves by $75 or less. The threshold is measured on the GST, not the price, and the ATO's own example shows how roomy that is: a $660 discount on an earlier sale shifts the GST by $60, under the line, no note required. In practice most casual discounts never touch the paperwork; it's the structured stuff (volume rebates, renegotiated contracts) that crosses $75 of GST and needs the document.
When a note is needed, the supplier must issue it within 28 days of whichever comes first: the customer asking for one, or becoming aware of the adjustment having already issued a tax invoice for the sale. And if you're the one claiming, timing follows the document: you take the decreasing adjustment on the first BAS you lodge after the note is in hand. One more free pass worth knowing: a rebate paid in the same tax period you report the GST on the sale doesn't need a note at all. File every note with the invoice it amends: they're part of your five-year records, and they're the first thing a review asks for when reported GST steps downward.
Third-party rebates: cashbacks that skip a step in the chain
The adjustment machinery above assumes the discount runs between a supplier and their own customer. Manufacturer cashbacks break that assumption on purpose: the manufacturer sold to a wholesaler or retailer, the retailer sold to the end customer, and then the manufacturer pays the end customer $500 to sweeten the deal, a payment between two parties who never transacted. The GST law handles this with third-party payment adjustments: the manufacturer claims a decreasing adjustment for the GST portion of the cashback, because the amount the chain finally kept from them went down, and an end customer who happens to be a GST-registered business that claimed a credit makes an increasing adjustment to match. The retailer in the middle does nothing: their sale, at their price, never changed.
Two wrinkles make this stricter than an ordinary rebate. The paperwork above $75 of GST is a third party adjustment note: same 28-day issue rule, and the payer can't claim the decreasing adjustment until the note exists. And the same-period shortcut disappears: a third-party payment needs its adjustment even when it lands in the same tax period as the original sale, because there's no single invoice to simply net it against. If you run cashback promotions, holdbacks or any incentive paid past your direct customer, this is a bookkeeping category of its own: worth setting up properly once rather than unpicking at BAS time.
Coupons, promo codes and the voucher boundary
A coupon you give away (10% off, $20 off your next order, a checkout promo code) has no GST consequence until it's used, and then the treatment is the one this whole page runs on: GST on the price the customer actually pays after the code is applied. The coupon isn't a voucher in the GST sense, because it carries no stated dollar value that can be spent like money; it's a discount with a delay on it. The voucher rules begin where the gift card begins: a card with a stated monetary value, where GST waits for redemption and follows what's bought.
The boundary bites hardest when you discount the gift card itself. Sell a $20 gift card for $18 in a promotion and the ATO's voucher ruling is blunt: on redemption, the consideration is the card's stated monetary value, so GST is worked out on the $20 of goods it buys, not the $18 you banked. The $2 you gave away is a marketing cost, not a GST reduction. Discounting ordinary prices cuts your GST in proportion; discounting face-value vouchers doesn't. If a promotion could be built either way, that asymmetry is worth a thought before the artwork goes to print, and if you're not sure which side of the line your product sits on, the charge-or-don't-charge basics are the place to start.
Quick answers
Do I charge GST on the full price or the discounted price?
The discounted price. GST is 1/11 of the consideration (what the customer actually pays) so a $110 item sold at 10% off goes through at $99 with $9 of GST, and that's the end of it. The tag price never mattered to the GST; only the money that changes hands does. The same figure is what you report as a sale on your BAS and what counts toward your GST turnover.
A customer took an early-payment discount after I'd already reported the GST: what now?
That's an adjustment event, not a mistake. The price of a sale you reported correctly has changed, so you make a decreasing adjustment (the difference between the GST you reported and the GST on the new, lower price) on the BAS for the period the discount happened. You don't revise the earlier BAS. If the discount lands in the same tax period as the sale, there's nothing extra to do at all: you simply report the net figure in the first place.
What is an adjustment note, and when do I need one?
It's the adjustment-world version of a tax invoice: a document from the supplier recording that the price changed and by how much GST. You need to hold one before you can claim a decreasing adjustment, unless the GST change is $75 or less, where no note is required. The ATO's own example: a $660 discount on an earlier sale moves the GST by $60, under the threshold, so no note. The supplier must issue one within 28 days of the customer asking, or of becoming aware of the adjustment if a tax invoice was issued.
I received a volume rebate from my supplier: what happens to the GST credits I claimed?
You hand some back. The rebate reduces the price of purchases you've already claimed credits on, so if you claimed in an earlier period you make an increasing adjustment (the GST portion of the rebate) on the BAS for the period you receive it. A $2,200 end-of-year rebate on taxable stock means $200 of credits come back. Your supplier makes the matching decreasing adjustment on their side, which is why the adjustment note exists: it keeps both ends of the same price change in sync.
I pay cashbacks directly to end customers who bought through retailers: does GST apply?
Yes: this is the third-party payment rule. A manufacturer who pays a rebate or cashback to the end customer, skipping the retailer in between, claims a decreasing adjustment for the GST portion of the payment, because the money they finally kept from the chain went down. If the customer is a GST-registered business that claimed a credit, they make an increasing adjustment. Above $75 of GST the paperwork is a third party adjustment note, and unlike ordinary rebates, the adjustment is needed even when the payment lands in the same tax period as the original sale.
Do discount coupons and promo codes carry GST?
A free coupon or promo code has no GST life of its own: it isn't a voucher, it's just a discount waiting to happen. When it's redeemed, GST is worked out on the price the customer actually pays after the code is applied, the same as any other discount at the till. The rules change when a card carries a stated dollar value that can be spent like money: that's a gift card, GST waits for redemption, and (counterintuitively) if you sold a $20 card for $18 in a promotion, the GST at redemption is still worked out on the $20 it buys, not the $18 you banked.
Do discounted sales still count toward the $75,000 threshold?
Yes, at the price you actually charged. GST turnover counts your sales at their real prices, so a genuine discount does reduce the running total: $90,000 of tag prices sold at an average 20% off is $72,000 of turnover, under the threshold. What doesn't reduce it is money someone else takes out afterwards: a marketplace's seller fee or a payment processor's cut is your expense, not a discount on your sale, so those sales count in full. Once the rolling 12-month figure reaches $75,000 you have 21 days to register: free through the ATO's own online services, or $119 + GST through our BAS-agent service if you'd rather have it reviewed and lodged for you.
Is a discount I give later a BAS mistake I need to correct?
No, and the distinction decides the whole process. A mistake was wrong on the day you lodged; a discount, rebate or refund that came later changed a figure that was correct when you reported it, which makes it an adjustment. Adjustments aren't corrections: you report them on the BAS for the period the price changed, with no revision, no correction limits and no four-year clock to worry about. If you discover you also got the original figure wrong, that part is a genuine mistake and follows the correction rules instead.
Related guides: GST on gift cards and vouchers · Fixing BAS mistakes · Tax invoice requirements · How GST credits work · How to calculate GST · Cash vs accrual GST · Crossing the $75,000 threshold · GST on surcharges and tips
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