If the thought of exploring the wondrous and remarkable world we in live doesn’t leave you clamouring to plan your next overseas adventure, for the shopaholics in us all, one of the added perks of travel is the prospect of tax-free shopping.
I’m not just talking about the savings you can make through duty free shopping at the airport. You can also claim the tax component of the sales price when making purchases throughout your trip.
For young Australian travellers, tax-free shopping is often met with a chorus of questions and confusion – and for good reason! There are often prescriptive rules attached to the claims process and these rules differ from country to country. Unless you are a seasoned traveller, keeping up with these rules (not mention rule changes) is no mean feat.
To help you take off on the next leg of your trip with some extra spending money, we’re making this process as seamless as possible for you. Below are some common questions about tax-free shopping for Australian residents travelling overseas.
How Do I Claim A Refund When Leaving Australia?
The Australian Tax Refund Scheme (TRS) allows overseas visitors and Australian residents (except operating aircrew) to claim a refund of goods and services tax (GST) and wine equalisation tax (WET) when you purchase certain goods in Australia.
To claim a refund, you must:
- be leaving the borders of Australia;
- purchase the goods no more than 60 days before departing Australia;
- spend $300 or more (including GST) at a single business. Bundling multiple receipts from a single business is fine;
- wear or carry the goods on board with you as hand luggage and present them along with your tax invoice(s), passport and boarding pass to the TRS officer. If the goods are restricted e.g. liquids, gels, aerosols or oversized items you will need to speak to check-in staff and have these goods checked in;
- have paid for the goods yourself; and
- have an original tax invoice for the goods.
I’m An Australian Resident Who Is Leaving Australia For A Holiday – Are There Any Additional Limitations To Claiming GST Back On Goods I Purchase?
The TRS was designed to ensure that tourists who visit Australia do not have to pay GST since they are not Australian residents. Accordingly, this scheme is based on the fundamental assumption that when you claim the GST component of your purchases with the TRS you will not be re-entering Australia with those items.
Nevertheless, the Passenger Concession does allow you to bring into Australia up to $900 worth of goods duty free or $450 worth of goods duty free if you are younger than 18 years of age. Families travelling together can pool this duty free allowance.
For example, if you are a family of four (2 adults and 2 children) and you claim $2,200 of goods tax-free in total as a family on your return to Australia, under the Passenger Concession, you will not be required to pay back tax on these goods – even though you have returned to Australia with them.
If the goods that you are bringing into Australia tax-free are of greater value than the Passenger Concession, Australian law requires that you declare all of these goods to customs on arrival.
In this situation, you will be required to pay back previously claimed tax under the TRS. The obligation to pay back the tax will apply to all items of this nature and not just goods that fall outside the Passenger Concession limit.
Penalties may apply if you do not declare that you are carrying into Australia duty free goods which are in excess of your Passenger Concession.
- Arrive at the airport early
This ensures you leave yourself enough time to have your claim processed. Long queues at the TRS office at Sydney International Airport are common. I recommend factoring in at least an extra 45 minutes to avoid disappointment.
- Save time by planning ahead
Enter the details of your purchases in the Customs and Border Protection Services mobile and web TRS app in advance of your departure date. Once you have completed the steps on the TRS app you will be issued a QR code which you can take with you, along with your purchased goods and tax invoices, to the TRS office. A dedicated queue is available for those who have taken this additional step, which is likely to help speed up the process for you.
- Have all your details ready
For big ticket items over the value of $1,000 AUD, make sure that you obtain a tax invoice which includes details of your name and address.
- What your tax invoice should include
Remember your tax invoice should have the words “tax invoice” on it and display the business name and Australian Business Number (ABN) of the retailer, a description of the goods, the date you bought the goods, the purchase price and the GST/WET component of the price.
Can I Claim Tax Back On Purchases Made In The EU?
Subject to certain rules, if you are a visitor to the EU you will be able to claim the Value Added Tax (VAT) back on your departure from the EU.
Some main points to note when claiming VAT back:
- If the retailer participates in the VAT-refund scheme (most larger-sized or tourist-oriented stores do), you will need to purchase a minimum amount before the store will process the paperwork necessary for you to obtain a refund document. From personal experience, each form can look quite different, so make sure you ask the retailer to show you how to correctly complete the forms before leaving the store;
- If you are travelling to multiple countries within the EU, you only need to declare your purchases to customs, and obtain a stamp on each of the refund forms you have, at your last point of departure from the EU.
- Depending on your final departure airport, you will have a couple of options on how you can receive VAT back on your purchases. At Charles de Gaulle airport in Paris, for example, you can either claim the VAT at the airport or post your refund documents (once you have obtained the requisite customs stamp) at the airport. In the latter option, a refund should be made to your nominated account within a few months.
- Factor in the length of your trip
If you are planning a substantial sojourn to the EU (6 months, for example), remember that you only have 3 months from the date of purchase to claim your VAT back;
- Get to the airport early
On a recent European holiday, my last destination was Paris. Even arriving at the airport 3.5 hours ahead of flight departure time, I was not able to collect a refund at the airport. Queues are shockingly long and could easily have taken another 45 minutes. I chose to post stamped/verified documents via the yellow postal boxes and received most of my VAT refunds about 2 months after arriving home.
- Ask retailers about minimum qualifying amounts
Find out from the retailer the minimum qualifying amount that you need to spend before you are eligible to receive the refund documentation. This can vary from country to country within the EU.
- Be prepared for different processes among stores
Different stores have different processes in place with respect to the tax refund. At large department stores in major cities (for example, Galeries Lafayette or Printemps) the process for claiming tax back is extremely organised.
Always speak to the “Information Desk” or “International Shopping Desk” to clarify the process before making purchases.
A Note About Shopping Overseas
Whether or not you are able to claim tax back on goods purchased in stores overseas can vary substantially.
In the United States, for example, sales tax is charged by a number of individual states and, in most cases, you will not be eligible for a sales tax refund. On the other hand, in countries such as Singapore and Japan there are similar programs to the TRS in place.