Fundamentals:
1. GST is a supplier liability. If a person hires an aircraft to you or sells you a seat on an aircraft, and the person is or is required to be registered for GST, that person is liable to pay GST on the value of the supply of the aircraft under the contract of hire or on the value of the supply of the seat on the aircraft.
2. The corollary of 1 is that the recipient of a taxable supply – i.e. the person who takes the aircraft on hire or who buys the seat on the aircraft - is never liable to pay GST on the hire or on the seat. (There are some very rare circumstances, involving imports, in which the parties can reverse charge GST).
3. The source of your obligation to pay for something today, and the way in which you work out how much you are obliged to pay, are in principle exactly the same as before GST was invented: what did the contract between you and the supplier say you had to pay?
4. An effect of the GST law is that if a contract between the supplier and the recipient says nothing about GST, the price is taken to be GST inclusive. i.e. An amount equivalent to the supplier’s GST liability is already built into the price. (I think this is the point alluded to by earlier posts.) E.g. ABC Aviation offers an aircraft to you at “$220 per hour wet”. Nothing is said about GST. You use the aircraft for 2 hours. You have a contractual obligation to pay ABC $440 and no more. ABC has an obligation under the GST law to send $40 to the tax man.
5. A ‘GST exclusive’ price is in law a contract that says the recipient of the supply has an obligation to pay the supplier a specified amount plus an amount equivalent to the supplier’s GST liability (remember point 1). The amount you pay is still determined by what the contract says. You still have no liability to pay GST (remember point 2).
6. There is no right under the GST law, or any other law, for a supplier to change a contract after it is made, by adding 10% to the price.
So: Make sure the terms of your contract – oral or otherwise – are clear before you enter the contract. If GST is not mentioned, the contract price is in law GST inclusive. The supplier has no right unilaterally to change the price after the contract is made, by, for example, adding 10% to the agreed price. A supplier may in effect offer a GST-exclusive price by saying the contract price is $X plus an amount equivalent to the supplier’s GST liability on $X. But GST-exclusive only works if those are the express terms of the contract (oral or otherwise).
By the way, I have become aware of a practice among some flying schools to offer flying training for a commercial licence at two different prices, depending upon whether the training attracts GST. (flying training for a commercial licence is in some circumstances GST-free education, but the same training in other circumstances – say the pilot is just doing the training for self-improvement – attracts GST). These schools apparently charge a higher amount for the GST-free training than the GST-exclusive amount charged for the training that attracts GST. A charging regime that would be tough to justify to the tax man and the ACCC, methinks.