ATO Interpretative Decision

ATO ID 2002/10

Goods and Services Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, an operator of a charter plane business, making a GST-free supply under section 38-355 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an international charter flight that includes domestic legs of travel?

Decision

Yes, the entity is making a GST-free supply under section 38-355 of the GST Act when it supplies an international charter flight that includes domestic legs of travel.

Facts

The entity is an operator of a charter plane business. The entity supplies a charter plane to transport passengers from Australia to an overseas destination and then back to Australia. The charter flight includes domestic legs of travel within Australia. The domestic travel forms part of the overall charter arrangement to fly from Australia to the overseas destination and return. The domestic travel forms part of the ticket for the international charter flight.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Under section 38-355 of the GST Act, certain supplies of transport of passengers, goods and related matters, are GST-free. Items 1 and 2 in the table in section 38-355 of the GST Act provide that, in certain circumstances, the international and domestic transport of passengers is GST-free.

Under item 1 in the table in section 38-355 of the GST Act, the transport of passengers from the last place of departure in Australia to a destination outside Australia, or from a place outside Australia to the first place of arrival in Australia is GST-free.

The international transport component of the charter flight involves transporting the passengers from Australia to an overseas destination and then back to Australia. Therefore, the entity's supply of international transport from the last place of departure in Australia to the destination outside Australia, and then from the place outside Australia to the first place of arrival in Australia, is GST-free under item 1 in the table in section 38-355 of the GST Act.

The domestic transport component of the charter flight does not come within the scope of item 1 in the table in section 38-355 of the GST Act. However, under item 2 in the table in section 38-355 of the GST Act, the transport of passengers on domestic legs of international flights within Australia is GST-free if:

•

the transport is part of a wider arrangement, itinerary or contract for transport by air involving international air travel; and

•

the transport within Australia formed part of a ticket for international air travel, or was cross referenced to such a ticket issued at that time.

The domestic transport provided by the entity forms part of the overall charter arrangement to fly from Australia to the overseas destination and back to Australia and formed part of the charter flight ticket. Therefore, the entity's supply of domestic transport is GST-free under item 2 in the table in section 38-355 of the GST Act.

As the international and domestic transport components of the charter flight are covered by items 1 and 2 in the table in subsection 38-355 of the GST Act, the entity is making a GST-free supply under section 38-355 of the GST Act when it supplies an international charter flight that includes domestic legs of travel.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-355
   section 38-355 table item 1
   section 38-355 table item 2

Keywords
Goods & services tax
GST free
GST transport
Domestic legs
International travel

Business Line:  GST

Date of publication:  9 January 2002

ISSN: 1445-2782