GST issues registers
Insurance industry partnership13 Travel insurance
Issue
Is incidental local travel forming part of an overseas trip treated as overseas travel for GST purposes? (For example, a trip from Brisbane to Sydney en route to overseas location.) Thus the travel is all GST free.
For source of ATO view, refer to GSTR 2000/33 Goods and services tax: international travel insurance.
ATO view
Item 2 of section 38-355 provides that the transport of passengers on the domestic legs of international flights is GST-free if the transport is part of a wider arrangement, itinerary or contract for transport by air involving international travel and at the time that arrangement etc was entered into the air transport in Australia formed part of the same ticket or was cross reference to such a ticket issued at that time.
That is, if the trip from Brisbane to Sydney is to connect with an international flight out of Sydney as part of the ticket for the international flight, that transport will be GST-free. If it is on a separate ticket (and not cross-referenced) it will not be GST-free.
This issue is also dealt with in GSTR 2000/33. Paragraphs 18 to 20 of that ruling provide:
Transport of passengers to and from place of departure
18. Insuring transport under item 6 of section 38-355 applies to the transport of passengers from and to their place of departure, and during the period that the insured is travelling overseas. Generally, there is only one insurance policy that covers the insured for both the domestic transport and while overseas.
19. The travel from and to the place of departure is usually a very small part of international transport. A recent sample of over 500 claims by value of claim under standard policies of industry associations shows that only 0.17% of claims arose from incidents occurring between the traveller's place of departure and the airport, and from the airport to the traveller's place of departure.
20. This examination of claims history indicates that the value to be attributed to this domestic component of the international travel policy is less than 0.5% of the total value of the transport. Provided the claims history for a particular product demonstrates that this domestic component is less than about 0.5%, there will be no need to apportion between the taxable domestic component and the GST-free international component. That portion of the cover can be included under item 6 of section 38-355 and can be treated as being GST-free.
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