Mixed supply vs composite supply

When you sell two or more items together, GST may treat the bundle as either a composite supply or a mixed supply. The difference matters because the tax treatment changes.

Composite supply

This is a natural bundle where one supply is the principal supply and the others are ancillary. The whole bundle usually follows the tax rate of the principal supply.

Mixed supply

This is an artificial bundle sold together for one price, where the items are not naturally bundled. The bundle is generally taxed at the highest rate among the items.

Why small businesses should care

Gift packs, service packages, event bundles and promotional offers are where confusion starts. If you bill the bundle incorrectly, you can undercharge tax without realizing it.