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  • Before border clearance (sealed bag method)

    If you sell goods to travellers before they reach the ABF border clearance area – including from a duty-free or tax-free shop not at an airport – the goods must be placed in a sealed bag.

    You must follow a system that verifies that the traveller has taken the goods out of Australia as part of their accompanied baggage.

    There are 12 rules that set out how you make a sealed bag sale:

    1. Confirm your customer is departing from Australia
    2. Check your customer has completed a sealed bag declaration
    3. Make three copies of the sales invoice
    4. Keep your copies for verification
    5. Do not give passengers goods more than 60 days before departure
    6. Goods must be in a sealed package
    7. Retrieve invoice before the ABF border clearance area
    8. Retrieve invoice after the ABF border clearance area
    9. Examine the sealed bag
    10. Notify us of any sealed bag tampering or other discrepancy
    11. Retrieve your invoices
    12. Reconcile your invoices

    If you don't comply with these rules, the sale is classed as taxable. That means you must pay GST on it and account for the GST on your activity statement – effectively, you end up paying GST on behalf of the customer.

    Make sure you have procedures and records to show that you have applied the rules correctly.

    If you find a mistake, you can make a voluntary disclosure by lodging a revised activity statement or emailing us at itxicb@ato.gov.au

    Find out about:

    See also:

    1. Confirm your customer is departing from Australia

    You have to be satisfied that your customer is travelling from Australia, and by law you must verify that they have taken the goods out of the country as part of their accompanied baggage.

    Confirm customers are departing Australia:

    • as individual travellers – look at their overseas ticket, and make sure the ticket belongs to the customer by asking for proof of identity, such as their passport.
    • as members of an organised tour group – must be on a tour group list  
      • a list will be an approved document if it is printed on the tour organiser's letterhead (or is signed by the tour organiser, a tour employee or agent) and contains
        • full name and residential address of the traveller (address is not necessary if it is recorded elsewhere – for example on the invoice)
        • passport details (that is, passport number and date of issue) of the traveller
        • tour number (if any) and name of tour organiser or operator
        • either departure details (including ticket number, name of airline or shipping line, flight or voyage number, date and port of departure), or a copy of a ticket of one of the tour group members (or, if group members are not all taking identical journeys, a copy of a ticket for each type of journey).
    • as Australian Defence Force personnel – must show their personal identity documents and authorised travel or movement orders issued by the relevant service.
    • as aircraft and ship's crew – flight or ship's crew identification, and a departure flight or voyage timetable (if available)
    • on private flights or voyages – a letter signed by the pilot or captain, setting out the name, address and passport details of the passengers to be carried, as well as the details of the flight or voyage concerned; a copy of an authorised government transport clearance document or permit for the pilot or captain to depart on that journey to a foreign country.

    2. Check your customer has completed a sealed bag declaration

    All travellers must sign a declaration for their purchases.

    Your customer must complete a Duty/Goods and Services Tax (GST) Free – Sealed Bag Declaration (SB declaration). This declaration contains details of the:

    • purchase
    • intended journey
    • purchaser's agreement to comply with the docket collection system.

    You may retain the SB declaration on its own or combine it with the traveller's declaration with a sales invoice.

    Before taking possession of the goods, the purchaser must sign and retain a copy of a SB declaration setting out, in the approved form, all of the following:

    • details of the purchaser, and the goods purchased, and the proposed journey
    • if the following matters are true, a statement that the purchaser        
      • intends departing Australia with the goods within 60 days of taking possession
      • will not interfere with the goods, the sealed package containing the goods or the copies of the invoice relating to the goods before submitting the sealed package to the seller in accordance with Rule 7 or Rule 8 (whichever applies)
      • will, in accordance with Rule 7 or Rule 8, submit the sealed package to the seller for removal of the border clearance copy of the invoice
      • is aware of the penalty for making a false or misleading statement
    • any other information or statement required by the approved form.

    See also:

    3. Make three copies of the sales invoice

    You have to issue an invoice in triplicate and in such a way that it cannot be altered.

    The three copies you create are:

    1. the customer's copy
    2. a copy that is attached to the outside of the package (the border clearance copy)
    3. your retail copy.

    The invoice must:

    • be made at the time of the sale
    • be in an approved form
    • be in triplicate
    • contain  
      • a description sufficient to identify the goods (including brand name and model number, if any)
      • quantity (in figures) of each item
      • sale value (in figures) of each item, or quantity of items
      • the total number of items in the package (to be expressed in words)
      • the total sales value (in figures) of the invoice
      • the date
      • name of seller
      • address of recipient
      • ABN of seller
    • prevent the addition of further items to the invoice (or copies) after the transaction has been completed  
      • for example, the invoice may be ruled off manually or electronically immediately below the last sale item
    • have a unique number that is one of a series of sequentially numbered invoices (if possible, all invoices in the series relate only to sealed bag sales from that seller).

    4. Keep your copies for verification

    You must keep both:

    • their signed SB declaration
    • your copy of the invoice.

    It is also a good idea to keep a copy of the customer's proof of identity such as their ticket and passport.

    5. Do not give passengers goods more than 60 days before departure

    You must not give the goods to the purchaser earlier than 60 days before the departure date on their ticket.

    Travellers can purchase goods more than 60 days before they leave, but the goods must be left at the store and cannot be collected any earlier than 60 days before the traveller leaves.

    Keep a record of the date that your customer can collect the goods.

    Example

    A purchase may be made up to 90 days before departure, but the traveller is not allowed to collect the goods more than 60 days before departure. In these cases, the date of collection of the goods (which will be different from the invoice date) will either be recorded on:

    • the original declaration retained in the store
    • a collection docket or receipt to be stored with the original declaration.
    End of example

    6. Goods must be in a sealed package

    The customer can only take the goods once they are in a sealed package.

    The sealed package must:

    • be (preferably) of transparent material  
      • however non-transparent printing, for example the store's name and logo, may be printed on the package
    • be securely sealed
      • so the goods cannot be removed from the package without the seal being broken using
        • plastic adhesive tape, staples, a heat sealing machine or other appropriate sealing apparatus
      • using tamper proof seals (or sealing tape) on all joins and opening points (so access to the contents of the package impossible without the seals being broken) – tamper proof seals (or sealing tape) must bear one of the following phrases (or similar)
        • 'GST-free goods – to be exported – do not break this seal before export'
        • 'Goods under ABF control'
    • have a border clearance copy of the invoice in a transparent waterproof envelope attached to the outside of the package
    • have the customer copy of the invoice inside the package by a method that, if possible, enables the invoice to be read without the need to break the seal of the package (if the package is small enough to be carried in the cabin of an aircraft)  
      • if the package too large to be carried in the cabin of an aircraft, or is to be carried on a ship, a large sticker notice must be placed on the outside of the package, bearing the words 'Goods to be carried in the hold of an aircraft or on board a ship' (or similar words)
    • have a printed warning attached
      • warnings may be on self-adhesive labels that can be attached to packages.

    See also:

    7. Retrieve invoice before the Australian Border Force (ABF) border clearance area

    If the bag or package is to be stored in the aircraft hold, before going through the ABF border clearance area the purchaser can give the package to the airline operator, who retrieves sales invoices on behalf of the docket collection agency – Duty Free Security.

    Duty Free Security:

    • operates on behalf of retailers at airports and seaports beyond the ABF border clearance area at airports and seaports
    • retrieves sales invoices and verifies that the goods have been taken out of Australia
    • collects invoices 24 hours a day, seven days a week at all major international airports in Australia.

    Contact them to get details of their service and fees, as well as information about retrieving invoices from travellers embarking on ships.

    If the goods are carried on a ship, the purchaser or their representative collects the invoice. As the invoice is collected, staff will also check the package to ensure it has not been tampered with. If the package is not sealed or has been tampered with, the staff member must notify us.

    If, before the purchaser presents themselves to the ABF as departing Australia, they surrender the sealed package to the carrier with whom they are to travel, the seller must retrieve the border clearance copy of the invoice at the point of surrender of the package. It is desirable that purchasers present the packages in full view of either:

    • hold luggage check-in staff of the airline
    • the purser or their representative on a ship.

    8. Retrieve invoice after the ABF border clearance area

    Travellers must carry their packages in full view so staff can see when an invoice needs to be detached.

    After passing the ABF border clearance area at the airport, the traveller presents the sealed bag or package to Duty Free Security staff who will check the package to ensure it has not been tampered with, then detach the sales invoice from the outside of the sealed bag (Rule 6).

    9. Examine the sealed bag

    Before the border clearance copy of the invoice is retrieved, you or your agent must examine the sealed package to check that it remains sealed and has not been tampered with.

    10. Notify us of any sealed bag tampering or other discrepancy

    You or your agent must notify us if you become aware that the package has been tampered with or is no longer sealed or the goods enclosed in the package are not the goods described on the customer copy or the border clearance copy of the invoice.

    Procedure for notification

    If Duty Free Security staff, or any other agency collecting an invoice, detects any tampering or discrepancies, they must request the traveller to sign a statement, addressed to the ATO, confirming

    • the full name, residential address and telephone number of the traveller
    • whether the  
      • seal on the package was broken or the package was tampered with by the traveller, or
      • goods in the package were not the goods described in the customer copy of the invoice.

    The agency must ensure that a copy of the SB declaration (showing the same signature of the traveller as the signature on the tampering declaration) must be forwarded to the local branch of the ATO within five working days of the date on which the discrepancy was detected.

    As the agency is agent for the seller, it is desirable that the agency also informs the seller of any tampering or discrepancies.

    11. Retrieve your invoices

    You must validate the retrieved border clearance copy of an invoice that your agent has removed from the goods that are being exported.

    The seller must validate a retrieved border clearance copy of an invoice:

    • as soon as possible
    • by the approved method.

    Approved method of validating invoices

    When a border clearance copy of an invoice is collected by the docket collection agency (the agency), it will be validated when the following requirements are satisfied:

    • the agency makes an electronic record of the identifying numbers of the retrieved border clearance copy of the invoice within 10 working days of the actual day of departure of the traveller on a flight or voyage that departed from Australia  
      • It is important to note that the border clearance copies of invoices from packages that have been tampered with (Rule 10) are not to be included in the electronic record
    • the agency produces (by the 15th day of the following month) a computer-generated document listing the invoice numbers of dockets collected in the previous month – this listing (referred to as the 'collection list') is either a:
      • simple list of all invoice numbers from each seller
      • reconciliation of invoices from those sellers that provide advance notification of sales before departure of the travellers concerned.

    12. Reconcile your invoices

    Once Duty Free Security staff have retrieved all border clearance invoices, they validate them by making an electronic record of the identifying numbers, preparing a collection list of all invoices from each retailer, and regularly sending each retailer a computer listing.

    You must reconcile the invoice numbers on the list with your copies of the invoices issued for GST-free sealed bag sales. If you have copies that do not match with an invoice on the collection list, those sales must be counted as taxable and adjustments may be required to account for the GST. That means that you have to pay the GST on those sales to us.

    The seller must reconcile the retrieved border clearance copy of an invoice against the seller's copy of the invoice, by an approved method.

    Approved methods of reconciling invoices

    Border clearance copies of invoices will be treated as having been reconciled against the seller's copies of invoices when all of the following requirements are satisfied:

    • the seller has received a collection list from the docket collection agency (the agency)
    • the collection list is on the authorised letterhead of the agency, or is stamped or perforated by a unique stamping or perforating device that is approved by us, and that is permanently held at the offices of the agency
    • the seller is able to match the seller's copies of invoices against the invoice number on the collection list
    • if no alterations have been made to the seller's copy of the invoice since the time of the original transaction, invoices with numbers matching those on the collection list are considered to be reconciled.

    Adjusting your activity statement

    If you make a sealed bag sale to a traveller who does not intend leaving the country until after you have lodged your activity statement, you will have to pay GST on that sale. It will not count as a GST-free sale until Duty Free Security confirms the invoice has been retrieved.

    Once the traveller has left the country and the invoice has been retrieved, you will need to make a decreasing adjustment to your activity statement for the tax period in which the invoice was retrieved.

    See also:

      Last modified: 04 Jan 2019QC 16664