Issue 3 - Travel agents' commissions

Travel agents arrange travel itineraries for customers through their network of transport providers, land product suppliers and other wholesalers. Things that form part of the travel itinerary include international and domestic transport (by air and sea), travel insurance, and hotel accommodation. For this arranging service, travel agents receive commissions from principals; or margins if they are selling as principals. Providers and arrangers of international transport of passengers need to identify which of their supplies are GST-free.

Issue

What is the GST treatment of travel agents' commissions?

Non-interpretative - straight application of the law.

Decision

Travel agents' commissions are consideration for the supply of arranging services in relation to a range of tourism services.

Generally, the supply of arranging domestic tours or accommodation will be a taxable supply. However, under section 38-355, GST is not payable on the supply of the service of arranging:

• the transport of passengers to, from or outside Australia
• the transport of passengers on domestic legs of international flights
• the domestic air transport of a non-resident passenger where the supply was purchased while the passenger was outside Australia, or
• the domestic transport of a passenger by sea where the transport is part of a journey by sea
• from Australia to a destination outside Australia, or
• from a destination outside Australia to Australia, and
• the transport is provided by the supplier who transports the passenger to or from Australia.

Also as mentioned in Issue 1 - Travel agents' commissions for arranging overseas supplies and Issue 2 - Travel agent fee for visa applications, arranging for the supply of other 'international' tourism services, the effective use or enjoyment of which takes place outside Australia, (for example, overseas hotel accommodation and visa) is GST-free under section 38-360.

Where a travel agent arranges for the supply of a mix of 'domestic' and 'international' tourism services in the one travel itinerary, the commission must be apportioned on a reasonable basis with GST payable on the arranging services in relation to the 'domestic' proportion.

References

Section 38-355 of the GST Act.

See also fact sheet - GST and international transport of passengers (NAT 3459).

GSTR 2001/8 - Goods and services tax: apportioning the consideration for a supply that includes taxable and non-taxable parts.

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