If you are a travel agent, you may receive fees – such as travel agents' commissions – for arranging transport and land content. A travel agents' commission can be any type of payment for agency services.
If the sale is for GST-free travel, the commission is also GST-free. This applies to registered travel agents and other tourism enterprises, such as:
- professional conference organisers, who arrange domestic and overseas travel on behalf of another person or persons.
Example: Professional conference organiser
XYZ Co, an entity in Australia, wishes to arrange an executive retreat in New Zealand for 12 of its managers. XYZ Co contracts with Conventions Ltd (a professional conference organiser) to arrange motivational talks, accommodation, meals and sightseeing tours. The transport and other services in relation to the retreat are GST-free, so the commissions received by Conventions Ltd are also GST-free.
End of example
- GSTR 2018/1 Goods and services tax: supplies of real property connected with the indirect tax zone (Australia)
- GSTR 2019/1 Goods and services tax: supply of anything other than goods or real property connected with the indirect tax zone (Australia)
Working out the GST
If you provide a combination of taxable sales and GST-free sales, the GST on any commissions for arranging those sales needs to be apportioned.
Example: domestic and international travel
Mike operates a travel agency in Sydney, and has a regular client, Samantha. She is participating in a convention in London and would like to combine this with a short tour of France. However, before the overseas travel, she wishes to travel to the Gold Coast with her family. Further, before departing overseas she needs two days at a Sydney hotel to prepare her papers.
Mike contacts various suppliers to arrange a travel package and price suitable for Samantha.
Mike also arranges for adequate travel insurance cover.
Mike will receive commissions from the various suppliers. To work out the total amount of GST payable on the commissions, he must identify the sales that are:
- not subject to GST.
- Domestic flight – Sydney-Coolangatta-Sydney – taxable sale
- Accommodation – Coolangatta – taxable sale
- Hire car – Coolangatta – taxable sale
- Hotel accommodation -– Sydney two days – taxable sale
- Domestic flight Sydney-Melbourne-Sydney (international flight departs and arrives Melbourne) – GST-free sale
- International flight Melbourne-London-Melbourne – GST-free sale
- Theatre tickets - London – not subject to GST
- European flight – London-Paris-London – GST-free sale
- Accommodation – Paris – not subject to GST
- Car hire – Paris – not subject to GST
- Travel insurance for international and connecting flights – GST-free sale
- Travel insurance for other travel – taxable sale
Therefore Mike must pay GST on commissions received for items 1-4 and item 12.
Example: Air travel and cruise
Jill is a travel agent, and arranges a sea voyage to Fiji for her clients' honeymoon. The package provides for the clients to take a connecting domestic flight from their home in Melbourne to Sydney. The ocean liner embarks from Sydney, berths at Brisbane and Cairns then cruises to Fiji and returns to Sydney. Jill receives commissions from both the airline and the cruise-ship operator.
- Domestic flight Melbourne-Sydney-Melbourne – taxable sale
- Cruise Sydney-Brisbane-Cairns-Fiji-Sydney – GST-free
In this case GST is payable only on the commissions received for the flights.
End of example
- GSTR 2001/8 Goods and services tax: apportioning the consideration for a supply that includes taxable and non-taxable parts.
You may receive extra commissions if you achieve set airline ticket sales over a specified period. These additional commissions are known as:
- an override commission
- a bonus commission
- a volume commission.
In most cases, override commissions are given regardless of the GST status of the transport.
The override commissions that relate to arranging GST-free transport are GST-free. Override commissions that relate to taxable transport are taxable.
The payment of an override commission is considered an 'adjustment event' rather than a separate sale, and requires an adjustment to your activity statement.
Explains the circumstances where international travel and tourism-related activities are taxable or GST-free.