Tuesday, 9 September 2014

Going on holiday? Get some tax back using the Tourist Refund Scheme

If you're an Australian like me and travel overseas you have probably noticed that the immigration form on the way home has a question about whether you are importing anything in the country with a value over $900.  Did you realise that there was a way that you could save money even if you don't buy something overseas?

What is the Tourist Refund Scheme?

The Tourist Refund Scheme (TRS) is an initiative by the Australian government to encourage people to buy goods and services in Australia.  It allows you to get back the tax you paid on the item when you leave the country with that item.  For most items this will be the Goods and Services Tax (10%) that you paid although for some items it may be even higher (e.g. wine gets 14.5% back).

What are the eligibility requirements?

The eligibility requirements are actually rather simple.  The goods need to be
  • Purchased in the 60 days before you leave Australia
  • The purchases need to total $300 (GST inclusive) from a single business
  • You paid for the goods
  • You have the original tax invoice
  • You need to carry the goods in your hand luggage or have had them verified by a Customs officer
So what isn't eligible?
  • Beer, spirits or tobacco
  • Goods that were GST free
  • Services
  • Gift cards
  • Consumable products that have already been partly used (although used clothing and cameras are ok)
  • Goods that you ship 

So how do you actually do it?

Most airports in Australia have a well marked counter where you can go and get your cash back - the cash is either paid into an Australian bank account or onto your credit card.  Note that when you go to the counter you need to
  • Actually have the product because they will want to inspect it
  • Have a proper tax receipt with the company's ABN on it

How much will you get back?

The amount you actually get back depends on how much tax you have paid.  If it was a normal product where 10% GST was paid on the product then need to divide the value you paid by 11 to work out how much you will get back when you leave the country.

Can you bring the goods back into Australia?

For Australians, the big question is - can you get the refund and then bring the goods back into Australia?  The answer is 'yes...but'.

Remember that $900 tax free exemption I mentioned above?  Well that's where this comes in.  You are allowed to bring $900 work of goods tax free into Australia (or $450 if you are a child).  The value of goods can be pooled across all travellers.  For example your tax free exemption if you are two adults and one child would be $900 + $900 + $450 = $2,250.  

If the value of your item is above this amount then you need to pay the tax on whole value of the item as you enter the country.

What if I buy an item to gift overseas?

A really common question is 'what if I buy an item to give as a gift overseas and this item is coming back into Australia'?  This question is typically asked by guys that are looking to get the GST back on a ring that they have purchased in Australia and then propose overseas.

The rules state that you need to declare the item (and pay the tax) if the ring is entering the country within 1 year of claiming your tax back.  If you don't declare it you could get stung with significant penalties.

I know that some guys definitely do this and then don't declare the ring when they come back into the country - however they are breaking the rules and risk getting caught...and this is a risk they choose to run (and I am certainly not recommending that you do this).

So what is the TRS useful for?

The fact is that you can save a decent amount if you plan your purchases ahead of holidays.  Planning on buy an iPad, tablet or laptop?  Why not save it until your holiday, take it along and then get a 10% discount on the purchase price?!  What about that camera you are going to use on your trip away - you can get this back to.

As long as you conform to the rules you can save a good amount on purchases you were always going to make.

Have you used the TRS scheme?  What did you use it for?

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  1. I used the TRS a little over a year ago for a gift I was taking for a friend overseas. Standing in front of me at the queue for the GST refund was a guy who was claiming the GST on an engagement ring. He clearly didn't have as good a command of the rules as you, as he kept changing his story about whether the ring was going to come back into the country or not.

    Eventually, the guys at TRS clearly didn't believe him that the ring WASN'T coming back to Australia, but processed the payment anyway. It came with a stern warning that if he was caught bringing it back in, he would have to pay the tax back, along with potential penalties...

    1. Yeah I confess that I wasn't as 'smooth' as I would have liked even though I knew all the rules and I got lectured for 10 minutes about the potential penalties...

  2. Yeah it's a decent scheme. I brought a $350 odd Sony Cybershot camera and getting back the ~$30 in tax was great..

    Must be getting excited for the trip now, when do you leave again?

    1. Yeah cameras are an amazing thing to get a refund on - and I really wish I knew about the scheme earlier...

      I'm leaving a month from today and I'm trying to work out what purchases I can bundle to get myself across the $300 mark from one store requirement.