Private ruling: GST and inbound tours
Date of advice: 13 February 2024
Published: 2 April 2024
Ruling period: Any tax periods ending on or after 25 July 2022

Ruling: Q1: Is the entity making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when it supplies holiday packages to non-resident travel wholesalers? | A1: Yes, the supplies are taxable supplies that are subject to GST. | Q2: Is the entity making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when it receives a commission or a rebate from Australian product suppliers? | A2: Yes, the receipt of a commission or rebate is consideration for a taxable supply.

Relevant facts and circumstances: The entity is an 'inbound tour operator' and is registered for GST. The entity arranges travel packages which may include airport transfers, hotel accommodation, car hire, entry into cultural and entertainment venues, meals and other services. The entity negotiates with the Australian product suppliers (eg hotels, restaurants, etc) for the supply of the required holiday package component. The entity supplies the holiday packages to a non-resident travel wholesalers which then on-sells the holiday packages to either foreign suppliers or directly to foreign travellers. All packages are purchased by people overseas, before they have travelled to Australia. The entity acts as principal when it negotiates with Australian product providers and when it supplies the holiday packages to the non-resident wholesaler. On occasion, the entity receives commissions or rebates from the Australian product providers.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Question 1 | Detailed reasoning | Generally, a supply of anything is a taxable supply and subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if: • the supply is made for consideration (payment); and | • the supply is made in the course or furtherance of an enterprise that is carried on by the supplier; and | • the supply is connected with the indirect tax zone (Australia); and | • the supplier is registered, or required to be registered for GST; and | • the supply is neither GST-free, nor input taxed. | The entity carries on a business of arranging travel packages as an 'inbound tour operator' and supplies the travel packages to non-resident travel wholesalers. The wholesalers pay the entity for the packages and those supplies are 'connected with the indirect tax zone' (Australia) because paragraph 9-25(5)(b) of the GST Act provides that any supplies made 'through an enterprise that the supplier carries on in the indirect tax zone' is connected with the indirect tax zone. As the entity is registered for GST, the supplies of the packages will be subject to GST unless they are GST-free. | Although some supplies of goods and services made to non-residents who are outside of Australia are GST-free, supplies of real property (such as a right to accommodation) or supplies of goods (or the right to goods) within Australia are not GST-free. Generally, goods and services consumed in Australia are not GST-free. Subsection 38-190(3) of the GST Act specifically makes sure that the supply of a right to a thing that is provided in Australia is not GST-free. | The supplies of the bundled travel packages by the entity to the non-resident wholesalers are not GST-free under any provisions in the GST Act. As the supplies satisfy the requirements of section 9-5 of the GST Act, they are taxable supplies and are subject to GST. Question 2 | Detailed reasoning | As mentioned above, a supply of goods or services will be subject to GST if it satisfies the requirements of section 9-5 of the GST Act. The term 'supply' is defined very broadly by section 9-10 of the GST Act and includes 'a supply of services' and 'an entry into an obligation to do anything'. | The entity receives commissions or rebates from Australian based product suppliers, such as hotels, restaurants or tourist attractions, because it is providing a service to those product suppliers. The services may be described as reselling those products and the payment of commissions or rebates is consideration (payment) for those supplies. Consequently, the service provided by the entity satisfies all of the requirements of a taxable supply under section 9-5 of the GST Act. As the services are provided by the entity to the product suppliers in Australia, there are no provisions that would provide for the services to be GST-free.