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11 September, 2019

Aussie travellers costing the government $500 million through GST loophole

Business people waiting at airport in departure lounge.

Aussie travellers have managed to cheat the taxation department out of more than half a billion dollars through the Tourist Refund Scheme (TRS).

The Australian National Audit Office (ANAO) has produced a report questioning the management of the scheme, concluding there is evidence of mass non-compliance from Australians causing a “significant revenue leakage” to the tune of between $244.3 million and $556.6 million over the 20-year life of the scheme.

Under the TRS, travellers leaving Australia can claim a refund of the goods and services tax (GST) and wine equalisation tax (WET) they paid on goods purchased in Australia within the previous 60 days.

Around 60 countries worldwide also have such schemes, however, Australia is the only country that allows its citizens and residents to participate.

According to the report, while the ATO and the Department of Home Affairs do not consider policing the TRS as a priority, its use is growing rapidly, with more than $1.6 billion in refunds being paid out since July 2000, 41 per cent of which was paid to Australians.

However, the refund works on the assumption the goods claimed will be exported, but some crafty Aussies are claiming on goods they will bring them back with them when they return.

The report suggests stronger systems should be put in place to oversee the management of the scheme.

“Home Affairs can place alerts on returning Australian citizens and residents where it suspects that goods may be reimported without being declared,” it reads.

“However, although this has produced a ‘hit’ rate of 41.9 per cent when it has been used, it is used relatively infrequently.”

According to ANAO, luxury items and electronics are the most common types of goods claimed, with $17.2 million dollars in Apple products claimed, $13.8 million worth of Louis Vitton, $10.1 million on Gucci and $10 million on David Jones.

Source: ANAO analysis of TRS data.

Labor senator Tony Sheldon said the system has become a “rort” under the coalition government with Aussies avoiding tax which could be used to fund health and infrastructure.

“Whose side is the prime minister on? The side of people who need Tiffany platinum bracelets and Gucci bags who are willing to rort the system? Or the rest of us?” he told parliament on Monday, according to SBS.

After Chinese passport holders, Aussies were the second biggest claimants in 2017-18.

The largest claim on record was paid to a foreign national in October 2011, who was given nearly $250,000 on a $2.6 million purchase.

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

ANAO Australian travellers tax TRS