• Tourism Sector

Compliance issues for the tourism sector

14 November 2019

The tourism sector remains core to Australia’s economy and both small and large inbound tourism operators (ITO’s) - and domestic tourism in general - now face increased competition and regulation.

ITO’s and the product suppliers must remain agile to stay ahead. As existing distribution channels change and new ones are established, industry participants must ensure that they are correctly navigating increasingly complex tax laws - as well as accessing benefits or any concessions that are made available to them.

BDO understands the changing needs of the sector and draw on decades of experience and knowledge in the industry, combined with foresight and strategy to provide tailored accounting, tax and advisory services.

Why is the ATO so interested in tourism?

The Australian Taxation Office (ATO) has developed an increased understanding of the inbound tourism industry, particularly from a GST perspective. As other areas of the economy show signs of a decrease in activity, it can be readily anticipated that those industries like tourism that are continuing to grow, will come under increased scrutiny.

As a result, it is important for all those within this sector to be well advised from a taxation compliance perspective, as a failure to do so may result in a large and unexpected taxation debt being assessed covering a number of years.  

What can industry participants do to remain compliant?

It may sound like common sense – because it is -  but ensuring your accounting systems are tracking and reporting your taxation obligations - on a transaction per transaction basis - is the key to preventing such an issue.

However, if your tax advisor does not understand your business and does not take the time to understand the basis of the agreements between your business and your various distribution channels and supplier agreements, it is unlikely that the taxation consequences will be identified and reported accurately, meaning the taxations laws and any applicable ATO rulings etc. may not be correctly applied to your particular circumstances.

The top four questions your business needs to be asking today:

1) As an ITO, are you enjoying a GST-free margin?

The PCG 2018/6 is guidance for operators is guidance for ITO’s, which are required to follow this guidance so they can continue - or begin - to treat certain commissions  GST- (or as it referred to in the industry, an ITO’s ‘margin’).  Now that the ATO has provided its views on when an ITO can self-assess their commission as being GST-free, failing to amend your operating and accounting systems to fall in line with these views is a risk not worth taking.

To find out more contact Fady Abi Abdallah or Steve Visser.

2) Do you operate in the MICE segment of the inbound tourism industry and have non-resident clients supplying or arranging events or conferences?

The ATO is increasing their focus on the Meetings, Incentives, Conferencing, Exhibitions (MICE) segment of the inbound tourism industry. In particular, GST-events and conferences supplied by non-residents may require non-resident organisers to be registered for GST.

To find out more contact Fady Abi Abdallah or Steve Visser.

3) Do you supply accommodation within Australia?

From 1 July 2019, offshore sellers of Australian commercial accommodation are required to include GST on sales.

This means suppliers of accommodation within the indirect tax zone (Australia) can be liable for GST on the commission made by an online travel agent, solely dependent on the agreement reached and the manner in which the parties transact.

The ATO has outlined their view on these recent amendments within, see ‘Example 3 - An agency booking service’ under the subheading “Information for offshore entities acting as agent.”

To find out more contact Fady Abi Abdallah or Steve Visser.

4) Employees versus contractors – are you getting it right for superannuation guarantee?

This is a significant area of interest for the ATO, and errors can prove both costly and time-consuming to resolve for employers. Should you be paying ‘contractors’ superannuation? Read article: Should you be paying your 'Contractors' superannuation?. Should you have any queries with regards to determining employee v contractor status, improving process efficiency or satisfying ATO compliance activities, please contact Mark Wilkinson to assist with navigating the complexity of this area.

About Australian Tourism export Council (ATEC) and BDO

How is BDO challenging the rights of the ITO sector?

Along with the Board and the senior staff of ATEC, BDO has been active in lobbying the ATO to reconsider its long standing view that an inbound tour operators commission is not subject to GST, but GST-free, where an ITO makes the arrangements to their non-resident clients while they are physically outside Australia in a manner consistent with that outlined within PCG 2018/6.

During our corporate partnership with ATEC, which has spanned six plus years, and in addition to the above, many inbound tour members have taken advantage of a one-off refund opportunity that was negotiated with the ATO and resulted in approximately seventy inbound tour operators entering into settlement deeds with the Australian Taxation Office and sharing in GST refunds.

At BDO we have developed an understanding of the inbound tourism system that is unrivalled both from an inbound tour operator and supplier perspective (accommodation and experience / activities). This experience allows us to identify both latent and future direct and indirect tax exposures in addition to providing other services such as auditing, business services, finance and various advisory services such as information technology and human capital.

How can we help?

BDO assists tourism-focused organisations across a number of different aspects of their business.

Our team of experts can provide a complete range of services including:

  • External and internal audit
  • Benchmarking
  • Data Analytics 
  • Corporate Finance and Financial Modelling
  • Business Restructuring
  • Indirect tax advice
  • Employment Tax
  • Corporate Governance
  • Forensic and Fraud Investigations
  • People Advisory
  • Technology Advisory.