Thursday, November 12, 2015
I had several enquiries yesterday about the ATO Interpretive Decision 2015/26 (ATOID) in relation to Goods and Services Tax (GST) and charges by shipping companies who supply international transport, so I thought I would share my thoughts in a non-advisory fashion. 

A copy of the ATOID may be found at the following link -

My understanding of the most important aspects of the ATOID is summarised in the following points:

1. The position of the ATO is explained under the heading Decision in the ATOID - the fees paid for loading, handling and associated activities form part of the consideration for a GST free supply of international transport made by the non-resident shipping line and are therefore GST- free under item 5 in subsection 38 รข?" 355(1) of the GST Act. The conclusion to be drawn from this statement is that if you are not a non-resident shipping line the ATOID does not relate to you and relates to whether or not a shipping company should be charging GST in the opinion of the ATO;

2. The ATO gives examples of the charges the ATOID refers to. These examples appear in paragraph 5 of the ATOID under the heading Facts. These charges  include Terminal Handling Charge (THC), ISPS Security Fee (SEC), Import Delivery Order Fee (DOC)  and Equipment Handover Charge (EHC);

3. Licensed customs brokers (broker) and freight forwarders (forwarder) are in some cases concerned as to whether or not they should be charging GST when billing these charges out as disbursements. I cannot see any need to do so because a disbursement merely passes through the accounts of a broker or a forwarder and are not charges which are related to a service provided by a broker or forwarder and by definition, can never be. If you are merely passing on a charge as a disbursement that does not include GST I cannot see why you would charge GST, unless there was something about your particular circumstances which requires you to do so;

4. The second paragraph of the ATOID provides protection and confirms that if you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be required to pay any penalty or interest. However, you will be required to pay any underpaid tax or repay any over claimed credit, grant or benefit.  The only person who could be asked to pay GST in this situation would be the shipping company as they are the supplier of the service that would be either taxable or GST free.

My policy for charging GST has always been If in doubt, charge it out. If you decide to charge GST for these costs it matters little as the cost to business will be refunded via a Business Activity Statement, while the cost to non business users of your services will be minimal and may give you peace of mind
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