Look before you pay: The surprise surcharge showing up on KFC receipts across Australia

I've been using every opportunity possible to teach my son Giovanni about money.

He has his some of his own now, so I thought a perfect opportunity for him to start learning how to manage it was by having him occasionally pay for his own fast food order at the drive through.

We have a weekly ritual of going to KFC every Wednesday afternoon, and he's been pretty proud to buy his own Popcorn Chicken Go Bucket or packet of nuggets.

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He spotted a deal at our local store in Baulkham Hills, Sydney this week. It was 24 nuggets for $10.95, which he thought was brilliant as he would have leftovers for later.

But when we went to pay at the drive through, an additional $1 charge had been added to his order.

It was listed as "tax", which I assumed was GST, but I wanted to check to give him the right information.

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I had never noticed KFC charged GST separately on food. I had grown used to retailers including GST in their prices, like McDonald's does.

I took a quick photo, he paid for his order and off we went.

A quick Reddit search showed another KFC customer wondering the same thing as us. Their order was for a Zinger Crunch Twister with lettuce, and two additional pieces of Hot & Crispy chicken.

The Zinger Crunch Twister is priced at $9.95 and the two additional pieces are $3.95, coming to a total of $13.91.

However, the GST is listed separately at $1.39, taking their overall total to $15.30.

"Never had that happen like this in any fast food restaurant. GST ends up being listed on the receipt but never added on top," they said, before wondering if this was a correct way to apply GST to food items.

Nine.com.au has been told the "tax" line on the item displayed on the KFC drive thru receipt is in fact GST, although KFC Australia has declined to comment on this pricing policy directly.

As Venkat Narayanan, Senior Lecturer in Tax at RMIT, told nine.com.au, individual businesses have a choice under tax law whether or not they include GST in their listed prices, or apply it at the point of purchase.

And GST law sounds pretty complicated. Here's how Narayanan explained it.

"The rules here are: for sales less than $82.50 (including GST), a tax invoice is not mandatory, but can be provided," he said.

"You'll note that most businesses that should be charging GST will provide a tax invoice regardless of sale price, because it makes sense for them to keep standardised records of all sales.

"For instance, if you bought a bag of chips for $5 from a supermarket you will get a tax invoice. For purchases over $82.50 but under $1000, a tax invoice must be provided and show itemised GST charges and the seller's ABN details.

"For over $1000, the tax invoice must be provided and show seller and buyer ABN details where applicable.

"The seller can also choose to show the GST per item sold or make a statement in the tax invoice that the 'total price includes GST'."

When asked why this GST requirement isn't uniform, and it is left to the business to decide how to display it, he said it isn't unusual for laws such as Australian Taxation Law to "allow for some flexibility or choice to those affected by it".

"From a consumer protection perspective it would make a lot of sense to have one uniform system so that consumers know clearly a) if they are being charged GST, b) which items GST is being charged on and c) the total price and total GST charged.

"If people did start to look at the GST component of the things they purchase this may affect their purchasing behaviour.

"For instance, when shopping at the supermarket you can pay less GST or even avoid by buying GST-free foods (typically basic cooking ingredients) and cooking at home rather than processed foods, which have GST attached."

And apparently the GST on $10.95 is often charged as $1 instead of $1.10 because GST is calculated as 1/11th of the total price, not as 10 per cent of the total price, according to the ATO.

John Storey, Tax Consel for The Tax Institute, said retailers who include GST in their listed prices need to state the prices are "GST-inclusive".

"The two items in the menu [in the Reddit post] have a total price of $14.90 ($10.95 plus $3.95), which is what the total price charged appears to be.

"However, businesses are free to itemise the GST component of the price on their invoices or receipts."

And this may be why KFC Australia chooses to apply GST at the point of purchase, according to Storey, because they do offer a popular catering service.

KFC Australia offers catering options designed for groups of 20+ or 50+ people, featuring bundles of Original Recipe chicken, Wicked Wings, tenders, nuggets, and sides. Orders can be placed online through the KFC website for pickup or delivery.

Businesses ordering KFC catering may require a clear or separate GST receipt, which their current GST system makes it easier to do.

"Although most of KFC's customers are probably consumers and not businesses, it likely happens sometimes (such as office catering etc)," Storey explained.

"There may be other reasons, such as pricing transparency, but to ensure any business customers have a valid tax invoice might be a reason."

And so, the mystery has been solved, and my son is learning valuable money lessons – one Go Bucket and one box of nuggets at a time.

He also learned a little about the complexity of GST and Australian taxation law, and will continue to try and understand it for some time, as do I.

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