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  • GST administration by Department of Home Affairs

    The ATO works with the Department of Home Affairs, which also has a role in administering the GST.

    Highlights

    During 2017–18, Home Affairs:

    • collected $4.1 billion in GST and $28.1 billion deferred GST on imported goods
    • cleared 4.1 million import declarations and self-assessed clearance declarations
    • processed 54 million import lines with an import value of $300.5 billion
    • cleared 1.4 million export declarations
    • processed 7.2 million export lines with an export value of $323.9 billion
    • administered over one million Tourist Refund Scheme (TRS) claims, with 98.4% approved, resulting in refunds of $228.3 million of GST and wine equalisation tax (WET).

    Home Affairs is responsible for the collection of customs duty on imported goods at the border as well as GST, luxury car tax (LCT) and WET. It also administers the deferral of GST on imported goods for registered importers of the GST deferral scheme. Home Affairs’ role is to control, detect, deter and treat non-compliance for both imports and exports of goods.

    Compliance program

    Home Affairs employs an intelligence-led, risk-based approach to the import and export of goods. Its general monitoring program provides capability to assess risk in the import and export environment. The program monitors the accuracy of cargo reports and import and export declarations submitted to Home Affairs. This, coupled with ongoing use of profiles in the import and export environments, gives an oversight of risk and assists in allocating resources in line with priorities. The Integrated Cargo System is used to facilitate the clearance of imported cargo and meet revenue payment obligations.

    Home Affairs works collaboratively with key partner agencies, such as the ATO, to ensure all revenue liabilities are payable and collected on imported goods. The ATO provides an assurance that revenue, including customs duty and indirect taxes, are correctly paid or deferred.

    Home Affairs’ pre-clearance intervention (PCI) and post-transaction verification (PTV) functions are key treatments for a wide range of border risks, including revenue leakage. Revenue leakage can occur through undervaluation, misclassification and non-declaration of goods, and false claims for GST exemptions, preferential treatment under free trade agreements and duty refunds and concessions.

    Home Affairs conducts PCI activities before releasing goods from customs control. It conducts PTV activities such as audits, after the release of goods from customs control.

    For the financial year 2017–18, Home Affairs compliance activities identified a total of $31.1 million in GST understatements.

    Figure 15: GST understatements

    GST understatements for the last three financial years are: 2015–16 $54.3m, 2016–17 $54.3m, 2017–18 $31.1m.

    Voluntary disclosures, where importers voluntarily self-report errors to correct information they have previously provided in the import or export environment, remain a major contributor to GST understatements (62.6% in the financial year 2017–18). As voluntary disclosures rely upon self-reporting, fluctuations in the value of GST understatements from year to year are common. While the current GST understatements are lower than previous years, Home Affairs will continue to strengthen its relationship with industry to enhance and encourage levels of voluntary compliance through education and awareness, while still addressing identified non-compliance.

    Home Affairs continues to deploy measures to detect and deter serious revenue non-compliance such as complex fraud.

    In 2017–18, Home Affairs focused on:

    • undervaluation
    • misuse of origin and concessions
    • misclassification
    • links to serious organised fraud and other crimes.

    Pre-clearance intervention activities

    Pre-clearance intervention highlights in 2017–18 included:

    • the customs value of imported goods assessed through pre-clearance intervention activities was approximately $9.7 billion (this does not include the value of imported goods subject to compliance activity).
    • targeted activities resulting in checks on 88,898 import documents (import declaration, self-assessed clearance declaration, air cargo report and sea cargo report), which identified GST understatements of approximately $5.9 million and GST overstatements of $3.4 million.
    • random sampling activities resulting in checks on 7,070 import documents that identified GST understatements of $115,529 and GST overstatements of $292,504.

    Post-transaction investigation activities

    Post-transaction investigation (PTI) activities include formal investigations, audits, desktop activities, leverage exercises, assessment of voluntary disclosures, and focused activities and adjustments resulting from checks of customs licensed premises.

    Highlights of post-transaction investigation activities include:

    • Formal audit
      • The customs value of imported goods assessed through formal audit activity was approximately $206.1 million.
      • Home Affairs conducted 262 targeted revenue audits, which identified GST understatements of $2.9 million and GST overstatements of $60,692.
       
    • Non-audit
      • The customs value of imported goods assessed through non-audit activities was approximately $4.9 billion.
      • Non-audit activities comprising assessment of 29 complex voluntary disclosures identified GST understatements of $19.5 million and GST overstatements of nearly $2 million.
       
    • Other
      • Compliance activities resulted in the rejection of refund claims with a GST value of $2.8 million.
       

    Tourist Refund Scheme

    Since 2012–13, there has been a significant increase in the number of GST refunds approved under the Tourist Refund Scheme (TRS). This can be attributed to an increase in passenger growth and a regulation change in April 2013 that extended the eligibility criteria.

    In 2017–18, the TRS received over one million claims for the first time (1,011,684). Of these, 98.39% were approved, resulting in refunds of $228.3 million of GST and WET. This number continues to grow with the continued growth in tourism and travellers both to and from Australia utilising the scheme.

    The TRS administration facilitates internal controls and procedures to ensure framework integrity. However, TRS functions have exceeded the financial amount received through the ATO for a number of years, with an increasing divergence.

    To ensure TRS compliance, the ATO obtains monthly TRS transactional data. Currently, the data is being used for compliance activities, including education.

      Last modified: 18 Mar 2019QC 58283