Revised exposure draft legislation was released by Treasury on 29 March 2010 which concerns changes to the GST law regarding the domestic transport of imported and exported goods.

Businesses involved in the Australian leg of international transport should consider the potential impact of these changes.

The proposed changes will amend the GST Act so that:

  • the transport of goods by subcontractors within Australia that forms part of the international transport of those goods by another entity from Australia is taxable. However, the supplies are goods and services tax (GST)-free where they are made to a nonresident that is not in Australia
  • the transport of goods by subcontractors within Australia that forms part of the international transport of those goods by another entity to Australia is taxable. However, the supplies are GSTfree where they are made to a nonresident that is not in Australia
  • the liability to pay GST on the domestic transport of imported goods is shifted from transport suppliers to the importer of the goods. This is achieved by adding the cost of domestic transport to the ‘value of the taxable importation’ used to calculate the GST liability on importation, whilst removing the GST liability on the supply of domestic transport services made to, and also services provided by, a nonresident that is not in Australia. This reduces compliance costs for domestic transporters and affected nonresident transporters
  • the scope of GST-free international transport supplies is extended to:
    • for exports, the last point of collection, prior to containerisation, for the supplier that transports the goods from Australia
    • for imports, the place of delivery of goods, as determined under the primary agreement that brings the goods to Australia, for the supplier that transports the goods to Australia, and
  • loading, handling and other services that facilitate the international transport of goods are also GST-free in similar circumstances to the supply of international transport and are added to the value of the taxable importation.

The following table compares the key features of the proposed changes with the current GST law, as it stands today:

Click here to view the table.