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  • Dispatch: Contract of sale

    What is dispatch?

    Dispatch is a term used in exporting that describes the money received (bonus) for loading a vessel earlier than specified in the contract.

    GST on dispatch

    Where an Australian exporter receives payment for dispatch, the Australian entity surrenders the right (a supply) to recover money from the overseas supplier. The surrender of the right occurs when acceptance of the consideration (the bonus for timely delivery) takes place.

    The supply in this circumstance would be GST-free on the basis that the supply (of the surrender of the right by the Australian entity) is to 'an entity that is not an Australian resident and is outside Australia when the thing supplied is done' pursuant to paragraph 38-190 Item 4(b) of the GST Act.


    If an Australian supplier sells goods FOB, and is a day early in loading those goods aboard ship, the overseas entity will be liable to pay a dispatch fee. The sales contract will usually stipulate the amount, $10,000 per day for example.

    The receipt of the $10,000 (dispatch) by the Australian company, is a surrender of a right to recover the money from the overseas entity (a supply). As the supply is to a non-resident entity, and the entity is outside Australia when the supply takes place, the dispatch is GST-free. (Paragraph 38-190(1) Item 4(b) of the GST Act).
      Last modified: 01 Sep 2015QC 16450