GST exemption allocation is the act of assigning GST exemption to a transfer so that the inclusion ratio becomes zero or reduced. Taxpayers may rely on automatic allocation rules or make affirmative allocations on Form 709/706 with adequate disclosure. Accurate tracking prevents mixing exempt and nonexempt property, preserves long-term protection, and reduces inadvertent taxable terminations or distributions.

Practitioners opt out of automatic allocation when inappropriate and file affirmative allocations with adequate disclosure. Clean records preserve inclusion ratios and future planning flexibility.