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  • Foreign Tour Operators: Guidance for BAS (Nov. 2003 onwards)

    Letter to all foreign tour operators who are registered for GST

    The Tax Office has recently confirmed its view about how GST applies to supplies of holiday packages. The current view is expressed in issue 44 of the Tourism and Hospitality issues log, which is a GST public ruling. Issue 44 was updated on 28 November 2003 and can be accessed on the Tax Office website. This communication provides information on how to complete Business activity statements from November 2003.

    Some foreign tour operators (FTOs) have registered for GST in Australia so that they can obtain input tax credits for acquisitions of Australian land product from Australian suppliers. These acquisitions are typically travel packages or components of travel itineraries (including hotel accommodation, domestic transfers, tickets for entry to entertainment venues, restaurant meals, car hire and similar) that the FTO will on-supply to other foreign suppliers or to travellers.

    If you have registered solely for the purpose of accessing input tax credits for your acquisitions from Australian suppliers, you may not be aware of your obligations to remit GST on taxable supplies that you make. Many FTOs have been operating in accordance with their understanding that because they do not carry on activities in Australia, they do not have an Australian GST liability when they supply Australian land product. This is not correct.

    You have a GST liability for any supplies that you make of rights to accommodation that is in Australia. For example, if you supply a coupon that can be redeemed by a traveller for a night's hotel accommodation, your supply is taxable. Similarly, if you supply an all inclusive tour, the accommodation component of the package is taxable.

    You are required to pay GST on your supplies of rights to accommodation in Australia. As the majority of FTO activity statements are reviewed, you should prepare your November and December 2003 activity statements as follows:

    • FTOs should lodge November 2003 activity statements relating to supplies made in November 2003 in line with the arrangements used to calculate earlier activity statement obligations. For example, this may have been on the basis of an earlier private ruling, or on the basis of previous Tax Office published advice.
    • From 1 December 2003, all sales of accommodation situated in Australia are taxable supplies.

    This advice relates specifically to supplies of accommodation situated in Australia from November 2003 onwards.

    If you require assistance you can contact a member of the GST tourism team:

    Justin Lee

    +61 2 9374 1125

    Michael Kranitis

    +61 2 9374 1391

    Anne Dawson

    +61 2 9374 1146

    Please note that the Tax Office will be closed from 25 December to 1 January.

    Yours faithfully,

    Michael Hardy
    Assistant Deputy Commissioner
    Goods and Services Tax

      Last modified: 19 Dec 2003QC 17336