Is It Legal to Advertise Prices Without Including GST?
Does your business sell products or services? What do you need to include in your prices? This article will guide you on what is required to advertise.
Businesses who sell products or services advertise their prices on different mediums. There are a few requirements that come along with presenting them to your customers. The most frequently asked question by business owners is what do they have to include in their advertised price. This article will help you understand what you need to include when it comes to your prices.
Before we get started, have a read of What is GST? to gain a better understanding of the tax being applied. If you are a business that needs to register for GST have a look at this article beforehand – How do I register for GST?
Earlier in the year, we wrote an article on GST in quotes – Do You Have to Specify GST on a quote? (2019 Update). As mentioned in that article, the ACCC (Australian Competition & Consumer Commission) requires the quoted price to be clear, accurate and not misleading to consumers.
What are the Laws?
Component pricing as described by the ACCC is when you present prices to your customers. That must be the total price of the good or service as a singular figure. This should include any tax, duty, fee, levy or other additional charges (e.g. GST or airport tax). Therefore, it is illegal to advertise prices without including GST. Section 48 of the Competition and Consumer Act 2010 (Cth) outlines this requirement.
Example – Business advertising a product on their e-commerce site. The price must advertise as either ‘$330’ or ‘$300 plus $30 (GST) = $330.’
The ACCC also describes this as a prominent single price. A prominent single price is clear and stands out so that the consumer can easily notice it. In addition to this definition are the factors you should consider. These include the advertising medium, size, placement, colour, font and background.
This does not apply to business-to-business (B2B) transactions. Only when the price representation is made exclusively by your business to another business as they do not involve advertising to consumers.
Example – Business selling a product to another business. The price can be $300 plus GST.
The only issue with B2B prices is that they are often on websites or public forums that the wider audience has access to. Therefore, it sometimes recognised as a B2C interaction. If this is the case, you must include GST in the total price being advertised.
Another exemption for the advertisement of the single total price requirement is if there are any optional charges or extras that cannot be quantified. Meaning those that you are unable to convert into a dollar amount at the time of displaying the price. An optional charge or extra is something a consumer chooses as part of a product or service (i.e. not part of the standard product).
Restaurants and cafes are also conditionally exempt from this requirement when certain conditions are met:
- Menu displays a surcharge on specified days
- Menu displays the following words ‘a surcharge of [percentage] applies on [specified days]’
- Display prescribed words in a transparent and prominent manner
Transparent under Australian Consumer Law (ACL) requires information about the pricing to be in plain language, legible, clear and readily available for the audience.
An example of what the ACCC can pursue when companies are not compliant with these laws was in a recent case from 2012 where an airline was found guilty of breaching Australian Consumer Law. The Federal Court imposed a penalty of $200,000 against an airline for contravening the single pricing provisions. For 10 months, the airline did not display on its website some airfare prices inclusive of all taxes, duties, fees and other mandatory charges in a prominent and single figure.
So as a business or consumer be wary of the fact that prices should include GST in the total otherwise it can be a breach of ACL. If you have any questions about a price you are advertising or believe someone is not displaying their price correctly feel free to reach out to one of our competition or consumer lawyers.
Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
Abhinav is a legal intern at Lawpath as part of the content team. Currently in his 3rd year studying a Bachelor of Laws at Macquarie University (Major in Banking, Corporate, Finance & Securities Law). He is keen to learn more about Mergers & Acquisitions in the future.