ATO Offers Guidance Over GST Confusion

July 4, 2016

Seabridge Global Logistics News

THE AUSTRALIAN Tax Office (ATO) has recently provided guidance that should offer clarity for importers and exporters over what constitutes “GST Free” international freight, and what does not.

In the guidance, the ATO has put aside convoluted rules and said that regardless of the terms of the contract, freight forwarders can treat the supply of international freight as ending at the Australian port of arrival, with any other service (such as domestic transport) being a domestic supply that attracts GST.

The ATO allows shipping and airlines to assume that the place of consignment is at the terminal gate of the port or airport of discharge as specified on the relevant Bill (Bill of Lading or Airway Bill).

For importers, this may mean that less of the freight forwarders services are included in the “Value of the Taxable Importation” (VoTI) report on the Import Declaration, and a larger portion is treated as a separate taxable domestic supply.

The transport and handling of goods (including issuing and processing documentation) at or up to the terminal gate at the port or airport of discharge, made by the supplier under the contract for international carriage, will be GST-free as these services are made at, or prior to, the place of consignment.

The change in revenue is neutral, and ultimately you should not be paying more or less GST. However, it will mean a simpler system and this should translate to lower compliance costs. While the impact is small, any cost reduction is good news for freight forwarders and therefore good news for our customers.

Navigating international freight contracts and taxation can be confusing, however Seabridge has the expertise to tailor individual freight solutions for our clients, saving them time and money. Contact Seabridge today and discover the benefits of engaging an experienced freight forwarder.