Common GST categories
International transport
International transport covers the carriage of passengers or goods between Australia and overseas, and these services are generally GST-free, unlike purely domestic transport.
International transport refers to moving people or goods between Australia and another country. Under the GST law, the international leg of the journey is generally GST-free. This means a flight from Sydney to Singapore carries no GST, and nor does the shipping of a container from Melbourne to a foreign port. The same applies in the other direction when the journey ends in Australia.
The reasoning is similar to that for exports. The service is in effect consumed outside Australia or is connected with a cross-border movement, so GST is not charged. Because the supply is GST-free rather than input-taxed, airlines and freight companies can still claim credits for the GST in their costs, such as fuel, maintenance and rent. This keeps the cost of international travel and trade competitive.
A domestic flight or a purely local freight movement does not qualify. A passenger travelling from Brisbane to Perth pays GST in the ticket price. When a trip includes both an international and a domestic leg, the treatment can depend on how the tickets are issued and whether the domestic leg is part of a single international journey. Such detail is why airlines and travel agents often have complex invoicing systems.
Related services can also be GST-free in some circumstances. These include certain services connected with international transport, such as loading cargo for export, some freight forwarding and certain travel arrangement services. Not all related services qualify, so each should be assessed based on its connection with the international transport and the conditions in the law. Insurance and some other services have different rules.
One common misunderstanding is that all travel with an overseas element is GST-free. A hotel stay in Australia, a domestic transfer, a tour of Australian attractions or a taxi from the airport is generally taxable even if booked as part of an international trip. Another is that international tickets purchased through an Australian agent are always treated the same, when agent commissions are usually taxable even if the ticket is GST-free.
If your business arranges or pays for international transport, check your invoices to see whether GST has been charged and whether the supply is shown as GST-free. Keep documentation such as tickets, itineraries and freight records to support your treatment. This page is general information only, so confirm the treatment of your transport costs with the ATO or a registered tax professional.
Worked example
An Australian importer pays a freight company $8,800 to ship goods from Shanghai to Melbourne. The international carriage is GST-free, so there is no GST on the invoice and no credit to claim on that charge. The same importer pays $330 including GST ($30) for local cartage from the port to its warehouse, and can claim the $30 credit with a valid tax invoice.
Practical tips
- Separate international and domestic legs when you code travel and freight costs, because only the international part is usually GST-free.
- Check agent or booking fees on an international trip, since those can include GST even when the ticket itself does not.
- Ask freight forwarders to show GST-free and taxable charges separately on their invoices to simplify your coding.