Govt cracks down on airport TRS rebates for Aust travellers

[Hvr]

An article in AusBT:

by David Flynn | March 6, 2018

The Federal Government is tightening its watch on Australian passport holders who claim a 10% tax rebate on expensive items before flying out of the country.

The Tourist Refund Scheme (TRS) allows for a full rebate of the 10% GST on goods worth $300 or more and purchased within 60 days of leaving Australia.

While the program is obviously aimed at overseas visitors to Australia, the Department of Home Affairs – through its Australian Border Force arm – is acting on concerns that the generous scheme is being abused by residents to claw back 10% on everything from smartphones and laptops to jewellery and clothing.

Australian residents are permitted to claim the TRS refund before flying overseas, but are required to declare the goods on their return.

Looks like honesty will be the only policy from now on.

 

[ajd]

As a traveller, the TRS is a great way to get a discount.

As a taxpayer, I'm honestly curious why Australian residents are allowed to use the TRS at all. I can't see how anyone benefits other than the individual who's wealthy enough to be travelling overseas with their expensive new toys. If this loophole disappeared I can't say I'd be all that sad.

 

[Franky]

As a traveller, the TRS is a great way to get a discount.

As a taxpayer, I'm honestly curious why Australian residents are allowed to use the TRS at all. I can't see how anyone benefits other than the individual who's wealthy enough to be travelling overseas with their expensive new toys. If this loophole disappeared I can't say I'd be all that sad.

Agree. Being no economist though, perhaps the theory could be that if you leave home with a brand new lap top, some small amount of money will stay in Australia as a result of the purchase, rather than allowing the same laptop purchased OS back into the country tax free/reduced?

 

[ajd]

Agree. Being no economist though, perhaps the theory could be that if you leave home with a brand new lap top, some small amount of money will stay in Australia as a result of the purchase, rather than allowing the same laptop purchased OS back into the country tax free/reduced?

That's actually an interesting point. Hmm.

 

[RooFlyer]

I like the crackdown. Australians claiming GST rebate for items they intend to bring back into the country has been an out-and-out rort - tax cheating, not to put to fine a point on it - for too long.

 

[Daver6]

Given you're allowed to bring in up to $900 worth of new items without paying duty (GST) on it, I don't see a problem with it.

Where it becomes a grey area is if you purchase say $2000 worth of clothing and claim back the GST as you depart. You then bring the clothing back in. What's the value of worn clothing? Certainly not $2000. A little easier with items that don't depreciate so quickly, but still plenty of grey. Again a user laptop/phone that cost say $1200. Bring it back in without the packaging and use. Certainly no longer worth $1200.

 

[RooFlyer]

Yes, but I know people time their purchases of laptops, cameras etc (even such for other people) just before a trip overseas with the specific intention of bringing it back with them, beyond the allowed limit. There have been a number of posts here on AFF where people have boasted about it.

Its the intent I'm concerned about. I've never done it, so not sure of what the refund declaration involves, but I'd hazard a guess that you aren't supposed to do what so many do - buy, claim, travel, return then use it as an everyday item (again, beyond the allowed limit). That's a rort.

 

[jbman]

Will this be the same govt that will be cracking down on multi national tax evasion or the Australia tax imposed on software in Australia...

Both parties boast they will make changes to our tax system yet the 'big issues' seem to just fade away

I doubt much will change with TRS.

 

[Must...Fly!]

Given you're allowed to bring in up to $900 worth of new items without paying duty (GST) on it, I don't see a problem with it.

Where it becomes a grey area is if you purchase say $2000 worth of clothing and claim back the GST as you depart. You then bring the clothing back in. What's the value of worn clothing? Certainly not $2000. A little easier with items that don't depreciate so quickly, but still plenty of grey. Again a user laptop/phone that cost say $1200. Bring it back in without the packaging and use. Certainly no longer worth $1200.

Is there a strict answer on this? I've always relied on it as a "back up" if someone wants to poke around my bags.

When I've claimed, most times I have every intention of bringing the items right back. But the most I have ever claimed on purchases was $1500 (camera gear). I generally am of the belief electronics depreciate 30-50% once you walk out of the store, but that's just my opinion.

I'd be most curious to know others thoughts!

 

[Franky]

I'm not sure that legally claiming for something can be considered a rort. It might be called a tax loophole,
but I see it as no different from bringing back duty free grog. I have bought both my iPads this way, my old iPad2 in 2010 which is no longer supported so as good as redundant, and an iPad Pro a month ago. On both occasions, I had already used and operated them prior to departing. If that's a rort so be it. I would hazard a guess that there are many people who return to the country multiple times a year and have no problems buying their duty free grog limit on each occasion.

 

[RooFlyer]

I'm not sure that legally claiming for something can be considered a rort. It might be called a tax loophole,

It comes down to what the declaration says at the point of claiming. If it says that they won't be brought back in, and you sign the declaration and then re-import them (or , if you always had the intention of re-importing), then that's illegal. Its that its so easily abused and not properly monitored that makes it a rort.

As per above, its a quite separate allowance and scheme from duty free. That's stuff bought outside the country (or airside at the airport ) and them imported. The TRS scheme is a refund of GST on goods already purchased because they are being exported. Its designed for bona fide tourists on the theory that they won't benefit from GST collected, so they get it back. if done by Australians, with full intent of re-importing and avoiding GST, beyond the $900 allowed, then that's not OK in my book.

 

[serfty]

Anecdotally, there's a default minimum 20% depreciation on used items (even if relatively new).

So that $1100 item where you claimed $100 TRS rebate on departure, when coming back would be valued at $800.

($1100 has $100 GST, valuing it at $1000, depreciate 20% off that.)

With that, your tax inclusive limit is $1237.49 with a $112.50 TRS refund.

If you are buying items overseas to bring back, that makes a limit equivalent of AU$1125 - as long as they are 'used'.

 

[opusman]

Buy a new camera before a trip and claim back the GST when flying out. Yes the government loses the 10% GST but at least a retailer here gets the sale and makes the profit. The alternative is to buy it in Singapore, and Aussie retailers get nothing.

 

[ajd]

Buy a new camera before a trip and claim back the GST when flying out. Yes the government loses the 10% GST but at least a retailer here gets the sale and makes the profit. The alternative is to buy it in Singapore, and Aussie retailers get nothing.

I'm going on a trip with a friend in two weeks to Singapore, among other places. He's just bought a camera from JB Hi-Fi in preparation, and will be TRSing it on the way out.

On the other hand, if the TRS weren't there, he'd probably still buy the same camera from the same store rather than wait until we're in Singapore - ultimately, the difference is only $40 or so. It's not *obviously* true to me that TRS access for Australians benefits our local retailers, and I'd love to see whatever modelling Treasury has done on this...

 

[Princess Fiona]

Agree. Being no economist though, perhaps the theory could be that if you leave home with a brand new lap top, some small amount of money will stay in Australia as a result of the purchase, rather than allowing the same laptop purchased OS back into the country tax free/reduced?

This is perfectly true. If it changes then I and others like me will just buy the goods cheaper overseas and declare them appropriately on return keeping my allowances in mind.
No win for Australian businesses there.

 

[drron]

When I claim TRS rebate when leaving I do declare on return if the value is over $900-using Serfty's depreciation formula.However I do price items in countries being visited and with things like computers and cameras it is usually cheaper particularly in the USA so I buy there.Sometimes,usually when on special,it is cheaper here.

 

[Princess Fiona]

I'm going on a trip with a friend in two weeks to Singapore, among other places. He's just bought a camera from JB Hi-Fi in preparation, and will be TRSing it on the way out.

On the other hand, if the TRS weren't there, he'd probably still buy the same camera from the same store rather than wait until we're in Singapore - ultimately, the difference is only $40 or so. It's not *obviously* true to me that TRS access for Australians benefits our local retailers, and I'd love to see whatever modelling Treasury has done on this...

Might be true for your friend and the camera. Definitely not a $40 difference for the majority of the purchases I make.

When I claim TRS rebate when leaving I do declare on return if the value is over $900-using Serfty's depreciation formula.However I do price items in countries being visited and with things like computers and cameras it is usually cheaper particularly in the USA so I buy there.Sometimes,usually when on special,it is cheaper here.

Same @drron
I calculate the cost of the items I’m purchasing online both here and my destination. Whichever is the cheaper option that’s the one I go with.
Sometimes it’s here or sometimes I will purchase here anyway if the thing I’m sourcing is hard to come by or I’m not certain of getting it at my destination.
I also make use of the VAT refund process in Europe.
In fairness I will say that the UK do not allow their own travellers to use that scheme so it wouldn’t surprise me if the Australian Government stopped it either.
C’est la vie, won’t stop me either travelling or shopping to suit my pocket.

 

[ajd]

Might be true for your friend and the camera. Definitely not a $40 difference for the majority of the purchases I make.

Fair enough, both of us are too cheapskate to even invest $500 on a camera

Honestly, I don't think that neither I nor most of us here have strong evidence for what the average TRS user's expenditure is like though - I suspect that as usual, the AFF crowd is likely to be somewhat unrepresentative.

 

[dajop]

I note the quote in original post talks interchangeably about "Australian passport holders" and "Australian residents" .

No good focussing on just Australian passport holders, needs to be on Australian residents! Many are residents with foreign passports, and some of us are Australian passport holders who are not residents.

 

[Deleted member]

I note the quote in original post talks interchangeably about "Australian passport holders" and "Australian residents" .

No good focussing on just Australian passport holders, needs to be on Australian residents! Many are residents with foreign passports, and some of us are Australian passport holders who are not residents.

I have two passports, neither of them Australian, and I am a permanent resident.