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  • Finalised Issues

    1. Travel Industry and agency/principal relationships -

    22. IT Interfaces and agency relationships in relation to clearing houses

    23. Commissions on inclusive or exclusive GST basis

    24. Commission on international travel

    25. The treatment of commissions earned by travel booking eg. tour desk at hotel/other

    40. Application of GSTR 2000/12, attributing GST payable, input tax credits and adjustments within the tourism industry.

    Finalised. Legislative changes have gone before Parliament and the Tax Office and TCA are continuing to develop an explanatory bulletin detailing the application of the legislation to the tourism and hospitality sector.

    Finalised. Discussions have been finalised and a decision reached regarding the relationship between airlines and travel agents. The results of these discussions have issued as a Private Binding Ruling.

    2. Where the domestic leg of an international sea voyage is by air or the domestic leg of an international air voyage is by sea, the domestic leg is not GST-free. Is there any proposal to change this?

    Finalised. There is no current proposal to change the legislation.

    3. Offsets between car and hire companies and wholesalers -

    26. Freebies/giveaways and other 'deals'

    27. Discount or other in-kind transactions

    Finalised. The definition of consideration is very broad. It does not simply mean money. If you receive anything for your goods or services, GST is applicable on the market value of the services. Therefore, if a plasterer does a job for a tiler, and vice versa, GST is payable on both transactions (assuming both are registered). However both will be able to claim input tax credits as long as the purchase of those services were creditable acquisitions (namely, not for private or domestic purposes, or for input taxed purposes).

    Where goods or services are provided free of charge GST is not payable on these goods or services. See the sections on 'Free Services' in the GST booklets.

    4. Treatment of licence fees such as EPA, Great Barrier Reef charges.

    Finalised. See Division 81 final release. This can be accessed through the Treasury web site

    5. Treatment of domestic travel sold overseas to non-residents.

    Finalised. A Private Binding Ruling has been issued to the relevant parties.

    6. Frequent Flyer points/loyalty programs.

    Finalised. Press release Nat 00/14 issued 1 March 2000, states in part 'The accrual and conversion or redemption of points by members into goods or services will not be subject to GST."

    7. Production of brochures, on-line advertising, calendars and other items.

    13. GST treatment of merchant charge.
    14. Price modelling.

    Finalised. Tax Office and TCA have sponsored meetings between industry associations and the Australian Competition and Consumer Commission.

    See agenda item I in minutes of Consultative Committee meeting of 21 June 2000.

    8. Duty free supplies/outlets.

    Finalised. The tax free sealed bag system will continue unchanged.

    9. Tourist Refund Scheme.

    Finalised. Australian Customs Service will continue to update associations through the consultative committee. See Consultative Committee minutes of 23 February 2000, 20 March 2000 19 April 2000, and 19 May 2000. Customs now have a web site which deals with questions and answers about the tourist refund scheme (

    10. Payment by instalment, definition of security deposit.

    Finalised. See Taxation Determination GSTD 2000/1..

    11. Will the medical portion of travel insurance be treated as GST-free?

    Finalised. To qualify as GST-free, private health insurance must be provided under a contract of insurance entered into by a registered organisation within the meaning of Part VI of the National Health Act 1953.

    12. Are activities of Bureau de Change to be treated as Input Taxed?

    Finalised. Generally, no GST is payable on the sale of traveller's cheques or the exchange of foreign currency. If you sell traveller's cheques or foreign currency to a customer, acting in your own right and not as an agent for someone else, then no GST is payable on the sale of the traveller's cheques or the exchange of currency. If you charge your customer a fee in providing traveller's cheques or foreign currency exchange services, no GST is payable on that fee.

    However, if you sell traveller's cheques or exchange foreign currency on behalf of someone else (that is as an agent) and you charge a fee or commission for your services, GST is payable on the fee or commission you receive for those agency services

    15. Many hotels entered into contracts up to 3 years prior to the GST (eg Olympics accommodation).

    Do they need to re-calculate their rates, or can they simply apply 10% to the quoted rate?

    Finalised. The Tax Office has produced a Fact sheet GST transitional arrangements - contracts which span the implementation of GST (NAT 2909) - WITHDRAWN covering the treatment of contracts entered into prior to 2 December 1998 and between 2 December 1998 and 8 July 1999. This Fact sheet is available from our web site or by contacting our infoline 13 28 66.

    Pricing issues are the subject of separate discussions between industry associations and the ACCC.

    16. Long term contracts (for example, hotel management contracts). Some contracts have been entered into for periods of up to 30 years.

    Finalised. See Treasurers Press Release No 36: long-term non-reviewable contracts.

    The Government will introduce measures to ensure that there is no disadvantage to either party to a long-term non-reviewable contract under The New Tax System.

    This will address the situation whereby certain pre-existing contracts that do not have review clauses were to become subject to GST from 1 July 2005 without the ability of the suppliers to recover the GST, while the recipients of the supplies receive an input tax credit.

    17. Apportionment of input tax credits (especially B&B and Farm Stay).

    Finalised. See GST Ruling GSTR 2000/15.

    18. Distinction between residential premises (input taxed) and commercial residential premises.

    Finalised.GSTR 2000/20 on this topic issued on 21 June 2000.

    19. Treatment of 'sub entities' in registered clubs.

    Finalised. Division 63 of the GST Legislation applies to non-profit bodies that are income tax exempt under certain provisions of the ITAA 1997.

    20. Averaging for mixed businesses.

    Finalised. The Tax Office has produced a booklet titled "Simplified GST Accounting Methods for Food Retailers" (NAT 3185). This booklet is available from the Tax Office infoline 13 28 66.

    21. Requirement for clubs on Substituted Accounting Periods to report monthly.

    Finalised. Under proposed legislative changes the requirement to lodge quarterly will not apply to non-profit bodies that are income tax exempt under certain provisions of the ITAA 1997.

    32. Itineraries and ticketing.

    Are itineraries considered to be tax invoices?

    Finalised. In some situations, you may issue a document before it is certain that you will make a supply because the document is merely an offer. In these situations, there is no supply until the recipient accepts the offer.

    Therefore an itinerary may constitute a tax invoice for GST purposes provided it meets the minimum information requirements set out in the GST legislation and regulations for tax invoices and the recipient has accepted the offer.

    34. Are childcare facilities provided at resorts and hotels GST-free?

    Finalised. To be treated as GST-free supplies, Child Care facilities must be registered under section 49 of the Childcare Rebate Act 1993.

    35. Contractors versus employees.

    Finalised. The key messages are -

    • if the supply is business to business, the ABN must be quoted to avoid withholding at the highest marginal rate plus medicare levy
    • if the payment for the supply does not exceed $50 there is no withholding obligation
    • if the payer is an individual and the supply is for them wholly private or domestic (eg, home owner contracts with a plumber) there is no obligation to withhold
    • If the supply is not made in the course or furtherance of an enterprise carried on by the supplier there is no obligation to withhold (eg, where it is a hobby or wholly private or domestic for the supplier).

    For more details are available from the Tax Office infoline 13 28 66.

    36. Treatment of alcohol (excise).

    Finalised. Goods and Services Tax Ruling GSTR 2000/6: special credit for sales tax paid on alcoholic beverages, issued on 12 April 2000. .

    37. How does the principle of 'mutuality' apply to GST and Club?

    Finalised. See Questions and Answers on the web site.

    38. The Tourist Refund Scheme specifically refers to accompanied baggage.

    How will goods that might go as cargo at the same time as the pax departs be treated?


    • Unaccompanied baggage cannot be included in the Scheme and there are no plans for legislative change to allow its inclusion.
    • There are no provisions that would allow goods travelling in the aircraft 'hold' to be included in the Scheme. Passengers must present to goods to Customs 'airside'. Discussions will continue with the airlines on 'hold' baggage verification.

    39. Travel insurance gives cover for a wide variety of occurrences. Will it be necessary to apportion the commission received for the GST-free and/or Input Taxed components of the insurance. What if part of the insurance for international transport also cover the traveller while in Australia?

    Finalised. A draft ruling GSTR 2000/D14 issued on this topic on 14 June 2000.

    41. The calculation of 'turnover' currently includes the value of all bets made through a poker machine. This will force many clubs and hotels that would otherwise report quarterly, to report monthly and to report electronically.

    Finalised. Under proposed legislative changes turnover from poker machines will be based on the margin.

    42. What are the requirements for the showing the ABN and ACN on business stationery?

    Finalised. The only Tax Office requirement is that the ABN be shown on tax invoices and adjustment notes. Businesses are free to show the ABN on any other stationery

    Current requirements under corporations law in relation to ACNs etc will continue.

    43. How is the commission received by a local retail agent from a local wholesaler in respect of an overseas package treated for GST purposes?

    Finalised. Where an overseas land product provider supplies rights to overseas land product direct to a local tour operator, the supply of the rights is generally GST-free under either items 2 or 4 of Section 38-190 of A New Tax System (Goods and Services Tax) Act 1999 ["the GST Act"], depending on the particular circumstances.

    Where the local tour operator chooses to use the services of a local agent in arranging the sale of rights to overseas land product and that agent receives a commission from the local operator, ("the wholesaler") for those agency services, there is a separate supply from the local agent to the wholesaler. This separate supply is GST-free under new section 38-360 of the GST act. The GST-free status under section 38-360 applies from 1 July 2000.

    "38-360 Travel agents arranging overseas supplies

    A supply is GST-free if:

    a) the supplier makes it in the course of carrying on an enterprise as a travel agent; and
    b) it consists of arranging for the making of a supply, the effective use or enjoyment of which is to take place outside Australia."

    s 38-360 added by No 156 of 2000, s 2 and Sch 1 item 4, effective 1 July 2000.

    44. Land product supplied to non residents

    View History

    Inbound Tour Operators: Date of Implementation

    Inbound tour operators: Guidance for BAS (Nov. 2003 to Jan. 2004)

    Foreign tour operators: Guidance for BAS (Nov. 2003 onwards)

    Foreign Tour Operators: Deferral of Activity Statement Lodgement (December 2003 to March 2004)

    Nature of arrangement

    Inbound tour operators (ITOs) typically provide package holidays or tailored itineraries for destinations in Australia. The package holidays comprise things on which GST is normally payable in Australia. For example, a package can include airport transfers, hotel accommodation, car hire, other land transport, tickets for entry to cultural and entertainment venues, meals and other services.

    The ITO's negotiate with land product providers such as hotel operators, restaurateurs etc for the supply of the required package components. The ITO's supply the holiday packages to foreign travel wholesalers. The foreign travel wholesalers on-sell the packages either to other foreign suppliers or directly to travellers.


    What is the GST treatment of the supply of a holiday package by the inbound tour operator?


    The ITO makes a supply to the non-resident tour wholesaler of the Australian land product. All of the requirements for a taxable supply are satisfied. No part of the supply is GST-free.

    The Tax Office previously allowed ITO's to treat the arranging of the supplies as a separate supply from the provision of the land product. The arranging service was a GST-free supply pursuant to subsection 38-190(1) item 2, while the provision of the land product was a taxable supply. Advice to this effect was published prior to the Tax Office issuing Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: apportioning the consideration for a supply that includes taxable and non taxable parts (GSTR 2001/8). In light of GSTR 2001/8, we now consider the earlier advice to be unsustainable.

    GSTR 2001/8 provides guidance for determining whether a supply is essentially a supply of one thing (a composite supply) or a supply of separate things (a mixed supply). If a supply is a composite supply, it is not necessary to apportion the consideration.

    GSTR 2001/8 provides that 'you should take an overall view of the circumstances of a transaction that comprises a bundle of features and acts'. Even where there are several distinct parts, it is only necessary to 'unbundle' the supply if the separate parts have different tax treatment. The application of GST to the major components of a typical land content holiday package is discussed briefly in the following paragraphs. To summarise, each element of the holiday package supplied to a non-resident is taxable. As the components have the same tax treatment, no dissection of the package (even if it is in fact several supplies rather than one supply with several parts) is required.

    Supplies of real property - accommodation

    The supply of accommodation is a supply of real property. It is therefore excluded from consideration as a GST-free supply under section 38-190 because that section applies only to supplies of things other than goods or real property. As there is no other GST-free provision that is applicable, the supply of accommodation to a foreign travel wholesaler is taxable. Further discussion of the Tax Office view that a supply of accommodation rights is a supply of real property can be found in Interpretative Decision ATO ID 2003/1058 and Goods and Services Tax Rulings GSTR 2003/7 and 2003/8.

    Supplies of goods - meals, car hire etc

    A supply of goods is excluded from consideration under section 38-190. GST ruling GSTR2000/31 Goods and services tax: supplies connected with Australia provides that a supply of goods by way of lease or hire is a supply of goods. As there is no other GST-free provision that is relevant, supplies of car hire, as well as restaurant meals and other goods to a foreign travel wholesaler are taxable.

    An alternate view can be put, depending upon the supply contracts and other factual information, that what is being supplied is not a supply of goods, but a supply of an option to acquire those goods. Unless the facts and circumstances of the supply strongly support this view, the Tax Office considers that the preferred view is that the supply is a supply of goods. However, if the supply is an option to acquire goods, subsection 38-190(2) operates to prevent GST-free treatment applying where the underlying thing is for consumption in Australia.

    Supplies of services - land transport, show tickets etc

    To establish the correct nature of what is being supplied requires an examination of the supply contracts etc. The supply may be one of prepaid services or alternatively a right or option to acquire services that are to be consumed in Australia. Whichever analysis of the supply is correct, subsection 38-190(2) or 38-190(3) will operate to prevent GST-free treatment applying where the underlying thing is for consumption in Australia.

    The service of arranging the land content supplies

    The arranging service does not need to be separately recognised for GST purposes. This element of the holiday package cost does not have a commercial purpose on its own. The arranging service cannot be separated from the land content components in a practical sense. The fact that a separate amount may be itemised for this service on an invoice for the supply does not alter its 'economically indissociable' nature or make the arranging a separate supply.

    Accordingly, the supply of local land product by an inbound tour operator to a non resident tour wholesaler is a taxable supply. There is no requirement to distinguish this component of the supply.


    GSTR 2001/8

    GSTR 2003/7

    GSTR 2003/8

    GSTR 2000/31

    ATO ID 2003/1058

    GSTD 2004/3 - Supply of rights to accommodation

    45. Transitional issues. The tourism and hospitality sector is faced with many issues over the transition to the GST, for example:

    At what point does a business start to account for the GST bar trading on the night of 30 June and poker machine trading on the night of 30 June?

    Finalised. Legislative amendments are currently before Parliament covering the night of 30 June 2000

    46. Requirement for written agreements in respect of Recipient Created Tax Invoices

    Finalised. Written agreements will be required.

    47. Where the domestic legs and international legs of international flights are issued on separate tickets, will the domestic leg be GST-free?

    Finalised. The Tax Office confirms that where a domestic air ticket is sold in conjunction with international air travel, but on a different ticket to the international air ticket , provided the domestic air ticket is cross referenced to the international air ticket, the domestic air ticket can be issued at any time until the commencement of the international air travel. Where this procedure is complied with, the domestic air ticket can be sold GST-free under Item 2 of Section 38-355 of the GST Act.

    49. Some restaurants account in a 13 period year (ie. even four week blocks).

    Is there any scope for these businesses to report on this basis for GST purposes?

    Finalised. The Commissioner may only make provision for 12 complete tax periods in each year.

    50. If a travel agent charges a passenger a fee for processing their visa application, is this 'arranging GST-free transport'?

    Finalised. A fee charged by an agent for processing a passenger's visa application is subject to GST. Processing the visa application could not be viewed as arranging GST free transport. Rather, it is a separate supply incidental to the arrangement of the transport.

    51. Is it still considered international travel if the ship or plane does not make land fall at an international port.

    Finalised. International transport of passengers is from the last place of departure in Australia to a destination outside Australia. If a plane or ship does not make land fall, then passengers may not disembark and there is no destination or predetermined end to the journey while overseas.

    If the international transport of passengers is from a place outside Australia to the first place of arrival in Australia, then there is no arrival until the passengers disembark

    52. Airlines charge an additional amount to arrange for the issue of a ticket overseas for a ticket purchased in Australia. This charge is referred to as a "Prepaid Ticket Advice". For example, someone in Australia may purchase a ticket for their mother in the US for her to come to Australia, and the airline will make arrangements for the ticket to be issued to her in the US. The person in Australia will pay for the ticket and an additional charge to arrange for issuing the ticket to the mother.

    Will this Prepaid Ticket Advice be subject to GST or will it be covered by Item 7 of section 38-355?

    Finalised. The prepaid ticket advice is not subject to GST.

    53. If an international visitor required their ticket to be re-issued whilst in Australia, are they subject to GST?

    Finalised The supply of international travel still occurs. Additionally, if the international (non-resident) visitor is reissued with a ticket in Australia for travel within Australia, which was purchased while the visitor was overseas, then it is still GST-free.

    54. Are the Noise Levy, Passenger Movement Charge and Domestic Head Taxes subject to GST?


    1. Aircraft Noise Levy is charged to airlines landing jet aircraft at Sydney Aerodrome under authority of the Aircraft Noise Levy Act 1995. This charge is administered by the Department of Transport and Regional Services (DOTRS).

    2. Charges levied to airlines under the Aircraft Noise Levy Act 1995 are included in Schedule 1 of the Div 81 Determination. Accordingly, these amounts are not subject to GST.

    3. The GST treatment of this particular charge is not as straightforward as the above might suggest.

    4. Currently the airlines recover from travellers, amounts they are liable to pay, via approximating an amount per passenger, currently $3.40.

    5. The levy amount shown on the ticket is not a personal liability of each passenger and should properly be considered to be part of the price of the airfare, and subject to GST in the same manner as the airfare. It is the airline that decides to show the approximation as a separate amount although its true character is the same as any other business expense. That is, the price charged would normally include all amounts necessary for the business to cover its costs (including in this case the noise levy) and presumably make a profit.

    6. Passenger Movement Charge is a per passenger amount levied under section 5 of the Passenger Movement Charge Act 1978. This charge is collected by international airline operators on behalf of the Australian Customs Service. The payment of the Passenger Movement Charge relates to international travel only.

    7. Charges levied to airlines under the Passenger Movement Charge Act 1978 are included in Schedule 1 of the Div 81 Determination. Accordingly, these amounts are not subject to GST.

    8. The ATO understands that these charges are the personal liability of each passenger but are collected from each passenger by the airline or their agents on behalf of the Australian Customs Service who have responsibility for administering the Act.

    9. Domestic Head Taxes as they are commonly referred to are a per passenger charge levied against airlines on the basis of the number of passengers to, from or through each of approximately 80 Australian regional airports.

    10. Schedule 1 of the Treasurers Determination No. 2 does not contain any references to per passenger fees, levies or charges for landing at regional airports. The Schedule to the Determination does provide that the "Airport Passenger Levy" charged under authority of Lord Howe Island Act 1953, will not be treated as consideration for a separate supply when charged to the airlines. Accordingly, these amounts are not subject to GST when charged to the airlines.

    11. Removed

    12. This will mean that all Domestic Head Taxes will be subject to GST when the airfare they are associated with is also subject to GST. Alternatively, all Domestic Head Taxes will be GST-free when they are associated with a fare that is GST-free.

    13. The ATO does not consider a supply of the right to land and or use the services of a regional airport (for which the Domestic Head Tax is the consideration) to be a supply of GST-free transport in accordance with items 2 and 3 of the schedule.

    55. Caravan Industry Association to forward submission to the Tax Office on the inclusion of motor homes under the Luxury Car Tax.

    Finalised. See Assistant Treasurer Press release No 30.

    This press release states in part - The Assistant Treasurer, Senator The Hon. Rod Kemp, today announced that the Government will move to ensure that motor homes and campervans are not subject to the Luxury Car Tax (LCT). The Government will also move to clarify the application of the LCT to make it clear the tax does not apply to a range of commercial vehicles that are not principally designed to carry passengers.

    56. Forfeited deposits and cancellation fees in respect of outbound tour packages

    View History

    Issue 7 has been withdrawn as it does not represent the current Tax Office view of the operation of the law in relation to forfeited deposits and cancellation fees.

    The Tax Office view of the operation of the GST law in relation to security deposits is explained in GSTR 2006/2 and the Decision Impact Statement of the High Court ruling in Commissioner of Taxation v Reliance Carpet Co Pty Ltd 2008.

    The Tax Office is currently preparing a goods and services tax ruling that will explain how the GST applies to 'cancellation fees'.

    57. Forfeited deposits and cancellation fees in respect of outbound tour packages

    November 2008, Issue 7 was updated to include a link to the released draft goods and services tax ruling GSTR 2008/D4 that explains how GST applies to 'cancellation fees'.

    58. Forfeited deposits and cancellation fees in respect of outbound tour packages

    May 2009, Issue 7 was updated to include a link to the released goods and services tax ruling GSTR 2009/3 - Goods and services tax: cancellation fees.

    59. Aircraft fees and levies

    View history

    May 2009, Issue 16 was updated as a result of the release of GSTR 2009/3 - Goods and services tax: cancellation fees.

      Last modified: 06 May 2009QC 16421