International
Duty free
Duty free refers to goods sold to travellers without customs duty and, in the case of departure sales, without GST, usually through licensed shops at international airports and ports.
Duty free generally means goods sold to international travellers without the usual customs duty, excise or GST that applies to ordinary retail sales. The shops are licensed by the Australian Border Force and operate in secure areas of international airports, at certain ports, and in some other approved locations. The tax treatment depends on whether the shop sells to departing or arriving passengers.
Goods sold in a departures duty free shop to a passenger who is about to leave Australia are treated as exports for GST purposes and are GST-free. They are also free of customs duty and, in the case of alcohol and tobacco, excise, as long as the goods are taken out of the country and the shop follows the conditions on its licence. Buyers typically need to show their passport and boarding pass.
Arrivals duty free shops sell goods to passengers entering Australia. These goods are not subject to customs duty or GST when they fall within the traveller's personal concessions, which set limits on alcohol, tobacco and the general value of goods. Anything over the allowances is subject to duty and GST at the border. The specific limits are set by Customs rules and change, so check the current figures with the Australian Border Force.
From the shop's point of view, duty free trading is a specialised area. The shop must keep detailed records, keep stock under secure conditions, and comply with the terms of its licence. A tax invoice requirement does not usually apply to GST-free sales to travellers, but proper records of sales, passports and boarding passes are needed to support the GST-free treatment.
There are common misunderstandings. Duty free does not mean tax free in every case, since goods bought and not exported, or goods brought in above the allowance, can attract tax. Another mistake is assuming that goods bought from an ordinary retailer qualify as duty free. Only licensed duty free shops can sell goods under the special conditions, although ordinary retailers may be able to support a tourist refund claim.
If you are a traveller, keep receipts and check what you may bring back. If you run a duty free business, ensure that your GST-free sales are properly documented and reported on your BAS. This content is general information only, and customs concessions and licence conditions change, so confirm your situation with the Australian Border Force, the ATO or a registered tax professional.
Worked example
A passenger leaving Sydney buys a $220 bottle of perfume at a departures duty free shop. The sale is GST-free, so the shop charges no GST and the passenger pays $220. If the same perfume were sold in an ordinary city shop at the same $220 price including GST, GST included would be $220 / 11 = $20.
Practical tips
- Keep passport and boarding pass details with each duty free sale, since this supports the GST-free treatment if the ATO reviews it.
- Check the arrivals allowances before you travel. Goods above the limit are subject to duty and GST when you enter Australia.
- Remember that duty free purchases are still subject to the airline's carry-on limits and to Australian import allowances when you return.