We have been air freighting goods from USA to Australia using Fedex as the carrier. The freight booking is made by our freight agent who we pay for the freight component. In this instance we will pay freight costs of A$1500. Fedex then charge our company for the clearance fee, Duties and GST. They calculate the value of the goods by converting the US$ value of the goods (say US$4200) at a rate below the actual exchange rate, then add transport and insurance before determining the overall value of the shipment and subsequent GST to be collected. The amount Fedex used for the Transport & Insurance was A$3801. This amount of A$3801 will not be actually invoiced or collected by Fedex. They will invoice our freight agent for an amount less than A$1500 (as this includes the freight agent's profit). We will pay GST on the A$1500 our freight agent invoices us for and we are also paying $380 GST on the imaginary A$3801 transport and insurance amount. So if Fedex is paying the ATO $380 (based on a fabricated amount) and our freight agent is paying GST on the actual amount ($1500) is the ATO receiving excess GST. Is Fedex paying the ATO all GST collected or just the GST on the amount they are charging our Freight Agent?
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4 replies
Hi @GKT,
The purpose of GST is for suppliers to collect it on from their customers and pay it to us in full.
Fedex should be using correct figures where possible to calculate the amount of GST to charge their customers. If this isn't possible, they'll let us know about the original amount of GST collected and then make an adjustment to tell us the amount has changed.
Have a look at the information on our website where it talks about paying GST on imported goods.
All replies
Hi @GKT,
The purpose of GST is for suppliers to collect it on from their customers and pay it to us in full.
Fedex should be using correct figures where possible to calculate the amount of GST to charge their customers. If this isn't possible, they'll let us know about the original amount of GST collected and then make an adjustment to tell us the amount has changed.
Have a look at the information on our website where it talks about paying GST on imported goods.
Thanks for that reply. The issue is that they do not actually follow the ATO's instructions. i.e. From the website Link you provided....
The value of taxable importation is the sum of:
- the customs value of the goods
- any customs duty payable
- the amount paid or payable to transport the goods to their place of consignment in Australia
- the insurance cost for that transport
- any wine tax payable.
Fedex, when contacting us and communicating correspondence related to our consignment and subsequent payment of charges (including GST), quote the Airway Bill (AWB) number. When they charge the account of the Freight Agent we use to make the booking arrangements on our behalf, they will use this as a reference. The AWB number links it all together. Therefore, they should able to link the actual air freight charge and insurance charge to our consignment to calculate the GST on our imported goods. They don't do this, they fabricate a transport cost and insurance cost, which is always substantially higher than the actual cost. So this is not the Amount paid or payable.
So where do we stand on this. Can this be investigated by the ATO?
Hi @GKT,
Thanks for bringing this to our attention!
Our tax system needs to be fair for everyone. If Fedex are charging you too much GST, they should be giving you some back once they know the correct amount. If this isn't happening and they're keeping the excess we need to look into it.
Please lodge a tip-off, you'll find the details on our website. This'll give us the required information.
Thank you for providing the link to lodging a tip-off. I will lodge one this week.
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