Edited version of private advice

Authorisation Number: 1052292101087

Date of advice: 08 January 2025

Ruling

Subject: GST and domestic air travel

Question 1

Is the supply of domestic air travel to the non-residents GST-free under section 38-355 of GST Act?

Answer 1

We are unable to rule on this matter as section 38-355 of the GST Act does not apply to you in respect of the supply of domestic air travel. Our view is that you did not make the supply of the domestic air travel to the non-residents as explained in our response to question 2.

Question 2

Are you entitled to claim input tax creditsfor the GST included in the price of the domestic air travel that you paid to the Airline?

Answer 2

No

This ruling applies for the following period:

1 July 20XX - 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a company incorporated in Australia.

You are a travel agent that is registered for GST.

You have an agreement with overseas companies (companies), under which you are granted licence in respect of an appplication programming interface (API) and access to related content on their website. The companies are in the business of providing technology and are also travel agents.

The companies' website is overseas based and agent access only website through which they provide services to online travel agents (OTA). Passengers do not book flights directly through the companies' website; rather they book through OTA's websites which show available flights. Upon receiving passengers' requests, the OTA send requests to the companies through the API. The companies then book flights through you, and sends you relevant booking information via email. Once you have booked the flights, you advise the companies of the ticket numbers. The companies then post the tickets on their website to inform the OTA.

You do not have your own website.

You are an Online Registered Agent (ORA) of an airline (Airline). An ORA is a registered agent that has been approved by the Airline to distribute fares online direct to end consumers or via an agent to end consumer. The Airline's Agent Terms and Conditions (Airline T&C) provides that in order to be approved by the Airline as an ORA, a registered agent must comply with the condition that for all online distribution, the registered agent may only access Airline data and make bookings via the Airline's API.

Other conditions specified under the AirlineT&C include the registered agent:

•                not allowing its customers direct access to the Airline's travel agent website; and

•                not creating a hyperlink from its website to the Airline's booking facility.

As an ORA, you are not paid any remuneration for the Airline's products that you distribute online direct to consumers pursuant to the Airline T&C.

The Airline T&C provides that a registered agent can issue an itinerary and tax invoice as an agent for the Airline in respect of all bookings made.

The Airline T&C does not contain any clause under which you will purchase tickets from the Airline and sell them to passengers in your own right. You do not have any other agreement with the Airline allowing you to do so.

In April 20XX you booked Australian domestic air travel with the Airline for non-residents while they were overseas.

You paid the Airline for the price of the tickets that you booked using your company card as you do for all bookings you make with the Airline.

You provided a copy of the tax invoice issued by the Airline which shows the following:

•                booking reference;

•                your name under contact details; and

•                the price of the tickets that includes GST.

You also sent us a copy of the itinerary issued by the Airline which shows the following:

•                booking reference;

•                your name and address under booking contact details;

•                flight details including names of the non-residents, dates, flight numbers and destination.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999, section 9-5

A New Tax System (Goods and Services Tax) Act 1999, section 11-5

A New Tax System (Goods and Services Tax) Act 1999, section 38-355

Reasons for decisions

Question 1

A private ruling is a written expression of the Commissioner's opinion on how a relevant provision applies, or would apply, to a particular entity in relation to a specified scheme, arrangement or transaction. It provides the taxpayer with advice on how the Commissioner will apply the tax law (which includes its administration or collection) to their particular circumstances.

Our view is that you did not make the supply of the domestic air travel to the non-residents as explained in our response to question 2; therefore, section 38-355 of the GST Act does not apply to you in respect of the supply of air travel. Accordingly, we are unable to rule on whether the supply is GST-free.

Question 2

Entitlement to input tax credits arise from creditable acquisitions and creditable importations.

Section 11-5 of the GST Act provides that you make a creditable acquisition if:

(a)           you acquire anything solely or partly for a creditable purpose; and

(b)           the supply of the thing to you is a taxable supply; and

(c)            you provide, or are liable to provide, consideration for the supply; and

(d)           you are registered, or required to be registered

For the purpose of section 11-5 of the GST Act, you make an acquisition if you are the recipient of the supply; that is, the supply is made to you. If you are not the recipient of the supply, you will not have made a creditable acquisition even if you provide consideration for the supply.

Was the supply of the domestic air travel by the airline made to you?

You submitted that when you booked the domestic air travel for the non-residents, you purchased the flight tickets from the Airline and sold them to the non-residents.

We do not agree that you purchased the tickets from the Airline and sold them to the non-residents.

Generally, in an agency relationship, the principal makes a supply to another entity through its agent. In such case, the principal makes the supply to the other entity, and not to the agent.

You are an ORA of the Airline. There is no clause in the Airline T&C specifying that when you book flights with the Airline, you purchase the tickets and sell them to the passengers in your own right. You do not have any other agreement with the Airline under which you are treated as a separate supplier of the flight tickets.

The fact that you booked the domestic travel through the Airline's website accessed only by registered agents does not mean that you purchased the tickets from the Airline. While you paid for the price of the tickets from your own funds, you are not the recipient of the supply of the domestic air travel. As regards the tax invoice issued by the Airline, we consider that as the ORA, your details were indicated therein merely because you are the contact for the non-residents. It does not mean that you are the recipient of the supply.

As the supply of the domestic air travel by the Airline was not made to you, you did not make an acquisition in respect of the payment you made to the Airline. Accordingly, you are not entitled to claim input tax credits for the GST included in the price of the domestic air travel that you paid to the Airline.

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