1300 186 629
sales@tomax.com.au
- Company
- Services
-
FREIGHTWith our Asian regional offices and global agency network you can rely on us to move your freight from A to B
WAREHOUSINGAround Australia we maintain and utilise over 12 warehouses for our client’s freight storage, packing and distribution.
-
- Tomax Live
- Tomax Group
- Resources
- Rate Request
- Contact
GST on Port Service Charges
A practical compliance approach which eliminates undercharging GST
Background
In practice and as a consequence of the ATO Interpretative Decision ATOID 2015/16, most shipping lines treat Port Service Charges (PSC) as GST Free. Consequently, as no GST has been accounted for on the PSC, the ATO requires the value of the PSC to be included in the Formal Import Declaration (FID)/Customs Entry’s Value of Taxable Importation (VoTI). This ensures that the appropriate GST is remitted to the ATO.
Complexities & Delays
Most shipping lines do not charge GST on the PSC, and the majority of freight forwarders do charge GST on PSC. There is a time lag in communicating the PSC values from the shipping line, through to the freight forwarder and then to us your customs broker. Customs entries (FIDs) must (although not always the case) be lodged prior to vessel or aircraft arrival to allow ABF & Biosecurity to complete their risk assessment.
Practical Approach:- from a Brokerage perspective
No matter how the PSC is dealt with by the shipping lines and freight forwarders (GST Free or GST payable), Tomax are being advised by the ATO and industry consultants, that we will need to charge the GST on the PSC. That way the customs entry only needs to show the overseas freight & insurance in order to calculate the GST component. Thereby not having to add the PSC to the overseas freight cost on the customs entry.
How Does This Effect You
This ensures that your customs entries are lodged with the ABF in a timely manner. We do not have to make a decision on each entry as to whether or not to include the PSC in the VoTI. This eliminates the risk of undercharging GST via the FID and being exposed to ABF & ATO scrutiny. There would be no net GST impact as you the importer are registered for GST and can claim the GST as an input tax credit. In addition, to the extent that GST was charged when it could have been GST Free, the GST law nonetheless deems the GST to be payable once charged by the freight forwarder and remitted to the ATO. You are entitled to an input credit in that case.
If you have any queries on this matter please contact Paul Watson on 1300 186 629.
Background
In practice and as a consequence of the ATO Interpretative Decision ATOID 2015/16, most shipping lines treat Port Service Charges (PSC) as GST Free. Consequently, as no GST has been accounted for on the PSC, the ATO requires the value of the PSC to be included in the Formal Import Declaration (FID)/Customs Entry’s Value of Taxable Importation (VoTI). This ensures that the appropriate GST is remitted to the ATO.
Complexities & Delays
Most shipping lines do not charge GST on the PSC, and the majority of freight forwarders do charge GST on PSC. There is a time lag in communicating the PSC values from the shipping line, through to the freight forwarder and then to us your customs broker. Customs entries (FIDs) must (although not always the case) be lodged prior to vessel or aircraft arrival to allow ABF & Biosecurity to complete their risk assessment.
Practical Approach:- from a Brokerage perspective
No matter how the PSC is dealt with by the shipping lines and freight forwarders (GST Free or GST payable), Tomax are being advised by the ATO and industry consultants, that we will need to charge the GST on the PSC. That way the customs entry only needs to show the overseas freight & insurance in order to calculate the GST component. Thereby not having to add the PSC to the overseas freight cost on the customs entry.
How Does This Effect You
This ensures that your customs entries are lodged with the ABF in a timely manner. We do not have to make a decision on each entry as to whether or not to include the PSC in the VoTI. This eliminates the risk of undercharging GST via the FID and being exposed to ABF & ATO scrutiny. There would be no net GST impact as you the importer are registered for GST and can claim the GST as an input tax credit. In addition, to the extent that GST was charged when it could have been GST Free, the GST law nonetheless deems the GST to be payable once charged by the freight forwarder and remitted to the ATO. You are entitled to an input credit in that case.
If you have any queries on this matter please contact Paul Watson on 1300 186 629.
