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  • Inbound Tour Operators: Guidance for BAS (Nov. 2003 to Jan. 2004)

    The Tax Office has recently confirmed its view about how GST applies to supplies of inbound holiday packages. The current view is expressed in issue 44 of the Tourism and Hospitality Industry Partnership Issues Register, which is a GST public ruling. This communication gives advice on the completion of November 2003, December 2003 and January 2004 Business activity statements (BAS).

    Issue 44 was updated on 28 November 2003. It can be accessed on the Tax Office's website at

    Issue44 addresses the GST treatment of supplies of package holidays by inbound tour operators to foreign tour operators. 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 ITOs negotiate with land product providers, such as hotel operators, restaurateurs etc, for the supply of the required package components. The ITOs supply the holiday packages to foreign tour operators. The foreign tour operators on-sell the packages to other foreign suppliers or directly to travellers.

    The ITO makes a supply to the foreign tour operators 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 ITOs to treat the arranging of the supplies as a separate supply from the provision of the land product. On that basis, 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.

    You should prepare your November 2003, December 2003 and January 2004 activity statements in line with the arrangements you used to calculate earlier activity statements. Where GST was levied on the arranging service fee for these periods, the GST on those transactions must be brought to account in the relevant activity statement.

    Further advice for future activity statements will be provided shortly.

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

    Justin Lee

    (02) 9374 1125

    Michael Kranitis

    (02) 9374 1391

    Anne Dawson

    (02) 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 17335