Goods and Services Tax (GST) operates as a tax on the consumption of goods and services in Australia. When the supplier is registered for GST, most goods, services and other items sold or consumed in Australia will be taxable at the GST rate of 10%.
The GST must be included in the price of the good or service and not charged separately as in the USA.
However, GST is not intended to tax the supply of goods and services to recipients/customers overseas; this is similar to the approach in many other value added tax jurisdictions. Generally, the exports of goods and services from Australia are GST-free, if the specific conditions in the GST law are satisfied. The main categories of GST-free exported goods are:
- Exports of goods;
- Exports of aircraft or ships;
- Consumables for international flights/voyages;
- Goods used to repair imported goods;
- Accompanied baggage.
- Goods supplied to an associate of an exporter if the goods are then exported;
- A new recreational ship exported within 12 months.
GST may not be payable by a person taking goods out of Australia as accompanied baggage. Under the Tourist Refund Scheme (TRS), GST on such goods purchased from a retailer with an Australian Business Number (ABN) and who is registered for GST, may be refunded to the purchaser. TRS does not apply to services.
A supplier of goods is treated as having exported goods from Australia if before the export, the goods were supplied to an entity that is not registered for GST – overseas recipients/customers are unlikely to have an ABN. The goods must have been “entered for export” under section 113 of the Customs Act and relevant documentation must be kept by the supplier. In addition, the recipient entity cannot use or make any alternations to the goods before their export, except if the alternations or use is necessary to prepare the goods for export. Packaging, wrapping, cleaning, disinfecting, dismantling or testing is considered necessary to prepare the goods for export.
Where a supply is by way of lease or hire and the goods are used outside Australia, the supply of the goods is GST-free. If the goods are leased or hired and used partly in Australia and party overseas, the supply can be a taxable or input taxed supply to the extent that the goods are used in Australia.
Sixty Day Requirement
Goods exported from Australia are GST-free if the goods are exported within 60 days of the following two events:
- The day on which the supplier receives any payment for the supply of goods; or
- The day on which the supplier issues an invoice for the goods.
If the goods are paid by instalments, such goods must be exported before or within 60 days of the earlier of:
- The final instalment of payment being received by the supplier; or
- The day on which the suppler gives an invoice for that final instalment.
The 60 day requirement does not apply to the export of new recreational boats.