Tax Back with Tourist Refund Scheme: A Grey Area?

Tax Back with Tourist Refund Scheme: A Grey Area?

Australia’s Tourist Refund Scheme (TRS) provides a GST tax refund on items bought in Australia. The scheme is designed primarily for tourists but can also be used by Australians when travelling overseas. From a traveller’s perspective, it’s a clever way to save 10% on purchases over $300, such as new phones, cameras and jewellery.

Under the TRS scheme, the GST paid on items bought in Australia is refunded when the goods are taken out of the country. It’s perfectly legal to bring the goods back into Australia without having to pay back the tax – provided they are worth less than $900. If the goods are worth more than $900 when returning to Australia, they must be declared and you may need to repay the GST on all of the items.

Groups of people travelling together can pool allowances. Each adult has a duty-free limit of $900, and children have a $450 limit. So, a family of four could legally bring up to $2,700 worth of tax-free goods into Australia. Goods can be depreciated, meaning they are considered to be worth less when brought back into Australia. “Personal items” are also exempt, although there are some conditions attached.

There is a “grey area” where the goods were valued at slightly over $900 when departing Australia. For example, someone might claim back the GST on their new $1,100 iPhone. Upon returning to Australia, the item could be considered to now be worth $800 after depreciation – and therefore under the $900 tax-free limit.

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.)

If you’re unsure whether the goods are worth more or less than $900, you should always declare them in question 3 on the Incoming Passenger Card. There are recent reports that Australian Border Force staff are now carefully enforcing the $900 tax-free limit. So if you plan to use the TRS scheme, make sure you’re familiar with the rules.

Given the amount of tax revenue lost, some AFF members believe Australia should follow the UK’s lead and exclude Australian residents from using the TRS scheme.

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.

But many members disagree, saying that losing access to the TRS would simply encourage more Australians to buy expensive goods from overseas. The losers would be Australian businesses.

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?

One member argues that there is no inherent problem with the Tourist Refund Scheme. The main problem is people not declaring high-value goods that are brought into Australia tax-free. This applies to any goods brought into Australia, regardless of where they were purchased.

The issue isn’t people abusing the TRS scheme, it is people not declaring things on the way back into the country and as someone else pointed out. if you buy a shiny MacBook or camera overseas then you also need to declare that on the way back in (which I bet most people do not)

Join the discussion on the Australian Frequent Flyer forum: Govt cracks down on airport TRS rebates for Aust travellers


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Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 60 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, New Zealand & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can contact Matt at [email protected]