Issue 14 – Domestic air travel purchased overseas by a non-resident

Sales of domestic air travel can be made in a number of ways, for example via the internet, by phone or through retail sales agents. Airlines need to establish whether the passenger meets the requirements of item 3 in the table in section 38-355 of the GST Act (item 3) before the travel can be treated as GST-free.

Under item 3 a supply of domestic air travel will be GST-free if:

(a) the passenger is a non-resident

(b) the supply was purchased while the passenger was outside Australia.

End of attention

Issue

How does a supplier establish the residency of a passenger who books and pays for domestic air travel remotely?

Non-interpretative - straight application of the law.

Decision

The ATO has accepted the following procedures as satisfying the requirements of item 3.

Internet sales procedure

You will need to record the following to satisfy the requirements of item 3.

1. The passport number and the country of issue of the proposed passenger.
2. The nationality of the passenger.
3. Confirmation that the passenger is currently outside Australia.

Where the conditions above are not satisfied the sale is not GST-free.

Telephone sales procedure

The following questions need to be asked and responses recorded.

1. Is the passenger a resident of Australia?
2. Is the passenger currently in Australia?
3. What is the passport number and the country of issue of the proposed passenger?

Where the answer to either question 1 or question 2 is 'yes', the sale is not GST-free.

Where these questions are not answered, the sale should not be treated as a supply within the meaning of item 3.

Retail sales procedure

1. Where the sale is made in a country outside Australia, the sale can be treated as a supply within the meaning of item 3.
2. Where the sale is made by a travel agent and the IATA Agent identifier indicates that the travel agent is located outside Australia, the sale can be treated as a supply satisfying item 3.

A passenger cannot make a GST-free purchase under item 3 from the Australian premises of a travel agent.

References

Item 3 in the table in section 38-355 of the GST Act (see Issue 11 - Land fall requirement).

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End of further information