GST not Being Removed on Coupons

[Renz]

Hi All.

I am not quite getting what I am doing wrong....(My settings are as per screen shot)

All normal sales calculate ok with the GST being included in the $ 9.95 post rate.

However if I want to offer a free post discount:

GST Rate = 10%

Discount Coupon: Posta Gratis :

$29.25 Sub-Total:
$9.95 Flat Rate (Best Way): (includes 0.90 cents GST)
$3.56 GST:
$29.25 Total:

I see it as when the $ 9.95 is being removed then the GST for the product itself should be changed to $ 2.66

Thanks for your time
Renz