Australia

Over $500 million lost as Australians rort tourist GST refund scheme

Travellers have made fraudulent claims to rort the tourist refund scheme. Source: AAP

Over $500 million in dodgy tourism tax claims may have been paid out by the government because of ineffective management.

Australians have rorted over half a billion dollars in a scheme allowing tourists to access refunds on tax paid on goods purchased in Australia.

An audit report has questioned the management of the scheme saying it has been made a low priority by the Department of Home Affairs and Australian Taxation Office.

The Tourist Refund Scheme (TRS) allows travellers leaving Australia to claim a refund on the Goods and Services Tax and Wine Equalisation Tax paid on purchases made in Australia within the past 60 days.

It has been determined the tax refunds for Australian citizens costed the budget up to $555.6 million over 20 years, according to the audit office.

The report by the National Audit Office found the administration of the TRS by Home Affairs and the ATO has only been “partly effective.”

The Tourist Refund Scheme allows people leaving Australia to claim GST back on goods purchased in the country in the past 60 days.
The Tourist Refund Scheme allows people leaving Australia to claim GST back on goods purchased in the country in the past 60 days.
AAP

“Detections of significant instances of fraud have been ad hoc rather than as a result of systematic data analysis,” it reads.

“Home Affairs and the ATO have determined that TRS compliance is a low priority.”

While, around 60 per cent of countries have such a scheme, the ATO believes Australia is the only country worldwide that allows its own citizens and residents to participate.

Evidence suggested a large level of non-compliance from Australian citizens and “significant revenue leakage” of between $244 million to $557 million since July 2000.

Those who claim they are taking goods out of the country then bring them back after international travel are believed partly responsible for this figure.

The report blamed this on limited systems and processes in place to manage the scheme or detect suspect claim.

“Home Affairs and the ATO have not used the available TRS data to implement systematic and routine compliance approaches to assist in detecting patterns and indicators of revenue leakage,” the report reads.

“The entities have not improved the TRS information technology system in any meaningful respect.”

People are seen lining up at Sydney Airport, Sydney.
People are seen lining up at Sydney Airport, Sydney.
AAP

Refunds of more than $1.6 billion have been made since the scheme was introduced in July 2000, with Australians claiming 40 per cent of that.

The audit office recommended the Department of the Treasury, Home Affairs and the tax office work together to develop stronger systems to oversee the management of the scheme.

“Home Affairs can place alerts on returning Australian citizens and residents where it suspects that goods may be reimported without being declared,” it reads.

“However, although this has produced a ‘hit’ rate of 41.9 per cent when it has been used, it is used relatively infrequently.”

In 2017/18, GST refunds worth $17.2 million were claimed on Apple products, $13.8 million on Louis Vitton, $10.1 million on Gucci, $9.1 million on Chanel, $6.2 million on Hermes and $4.3 million on Tiffany and Co.

People are seen lining up at Sydney Airport, Sydney.
People are seen lining up at Sydney Airport, Sydney.
AAP

Labor senator Tony Sheldon said the system had become a "rort" under the coalition government with Australians avoiding tax which would otherwise fund health and infrastructure.

"Whose side is the prime minister on? The side of people who need Tiffany platinum bracelets and Gucci bags who are willing to rort the system? Or the rest of us?" he told parliament on Monday.

The largest claim paid out was to a foreign national in October 2011, who got a refund of nearly $250,000 on a $2.6 million purchase.

Chinese passport holders were the biggest claimants in 2017-18, with over $100 million paid out in refunds in 2017-18.

Australians were the second largest group, claiming just over $50 million in claims.

The auditor made three recommendations, which included three to Home Affairs and the tax office and one to treasury.

Home Affairs and the tax office agreed to all the recommendations, which included implementing systems it had already developed to police dodgy claims.

Treasury also agreed to a recommendation to work with the other two agencies to assess the claims.

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