Goods and Services Tax Industry Issues
Tourism and Hospitality Industry Partnership

Treatment of the domestic leg of an international flight

• Please note that the PDF version is the authorised version of this ruling.
  This publication is extracted from the Tourism and Hospitality Industry Partnership - issues register. See travel agents issue 13 of that register. This publication should be read in conjunction with the related content of that register where further context is required.

This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

1. A GST registered airline operator supplies transport on the domestic leg of an international flight. A domestic air travel ticket is issued separately. The domestic ticket is sold in conjunction with and cross-referenced to an international air travel ticket.

Issue

2. Where the domestic legs and international legs of international flights are issued on separate tickets, is the domestic flight GST-free?

Decision

3. The airline operator makes a GST-free supply under item 2 in the table in section 38-355 when it supplies transport on the domestic leg of an international flight provided the separately issued domestic ticket is sold in conjunction with and cross referenced to the international ticket.

4. The operator is supplying air transport within Australia on the domestic leg of an international flight. This transport is part of an itinerary in conjunction with international air transport. Furthermore, although the domestic ticket was issued separately and at a different time from the international air ticket, it was cross-referenced to the international air ticket. Therefore, the operator's supply of domestic air transport satisfies the requirements in paragraphs (a) and (b) of item 2, and is GST-free under section 38-355.

5. For example, an operator of a charter plane business supplies an international charter flight that includes domestic legs of travel. The domestic transport provided 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 supply of domestic transport is GST-free under item 2 in the table in section 38-355.

References