Duty-free is it worth it?

As much a holiday tradition as cocktails by the pool, does duty-free still offer good value?
 
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  • Updated:23 Aug 2005
 

01 .Introduction

Duty-free_iStock

In brief

  • Duty-free shopping can still offer good value, but your destination’s exchange rate with the Australian dollar affects prices — and so your savings — substantially.
  • Make sure things like electronic goods and cameras come with a written worldwide warranty and suitable power specs for Australia. For more on this, see Buyer beware (below).

For years duty-free shopping was one of the perks of travelling overseas and substantial discounts could be had on a range of luxury goods from alcohol to watches to perfume. But with the introduction of GST, a whole raft of hidden taxes was phased out, including many of the wholesale taxes and import duties that used to make duty-free goods such good value. So is duty-free shopping still worth it, or can you bag a better bargain just by shopping around here or at your destination?

Please note: this information was current as of August 2005 but is still a useful guide to today's market.


What we did

  • In Feb/March 2005 we priced a range of goods sold in duty-free shops in airports in Australia and popular destinations overseas, and compared them to the prices we could get by shopping around here in retail shops, discounters and even eBay. See Prices compared for details.

Comparisons aren't easy

  • Overseas duty-free shopping can still offer you good value — but it depends on your destination. Singapore is hard to beat for most items, mainly because — at the time of writing — there was such a favourable exchange rate with the Australian dollar. This is the biggest factor affecting most price comparisons and, with most currencies now floated, the price you pay varies according to the exchange rate of the day.
  • Duty-free retailers also take note of the prices offered in other countries and adjust accordingly on a regular basis, so prices are constantly shifting.

Overall, you need to be aware of how good the Australian dollar exchange rate is in the country you’re visiting, and also be willing to spend the time shopping around both before you go and then overseas if you really want the best possible bargain.

Buyers beware

Warranties

If you're tossing up between buying electronic goods in Australia — either duty-free or retail — or in duty-free overseas, consider the following:

  • Because warranties are administered via retailers, if you buy an item and it breaks down your first port of call is meant to be the shop that sold it to you. This is a problem if you bought while overseas and are now back home.
  • Some companies do offer a worldwide warranty service, which means a broker or retailer here may honour a warranty for something bought overseas, but you should check this carefully with the manufacturer, preferably before you travel.
  • If you don’t and you decide while overseas that there’s something you really must have, the shop may well assure you that the warranty will be honoured back in Australia. But remember, you’re getting advice from a shop that probably makes the bulk of its sales to transiting, rather than repeat, customers.
  • At the very least make sure what you purchase comes with a written guarantee of the worldwide warranty and that there are written contact details for the company’s service arrangements in Australia.

Voltage

  • Buyers of electronic goods like computers may also be hit with another problem. While the goods overseas may be cheaper, they may not be designed to run on the same voltage as the ones sold in Australia. This might mean you also have to buy a potentially bulky transformer to make it work, which eats into any savings you make.
  • If you do want to make this sort of purchase, make sure you read the fine print of the specifications very carefully.

This article last reviewed August 2005

 
 

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What we found

  • Both alcohol and perfume are better value duty-free than buying in a retail store here, and perfume was also cheaper in all the overseas airports we checked except Auckland.
  • For alcohol it isn’t always easy to compare prices. Spirits tend to be sold in bigger bottles (sometimes with a higher alcohol level too) in duty-free shops, so it’s hard to compare like with like, and overseas we also found packages that offered a good deal if you bought two bottles instead of one. While you’ll pay less per millilitre, two bottles are of course still going to cost you more than one.
  • Comparing the prices worldwide of electronic goods like digital cameras and the APPLE iPod is also difficult. Because models are superseded so quickly (cameras seem to average roughly a six-month cycle) and are susceptible to demand, a model available in Australia may no longer be available overseas, or vice versa.
  • Watches are also very hard to compare because not all shops stock exactly the same range. This means if you have your heart set on a particular model, you can’t count on finding it everywhere.

GST Refunds

If you’re travelling overseas you can even buy portable items (such as a digital camera) in a normal retail store before you leave, take them with you and claim a tax refund on them. Using the Australian Customs Services’ Tourist Refund Scheme (TRS), you may be able to claim a refund of the GST, which applies to things like clothing, jewellery, shoes, cameras, small electrical goods and souvenirs, and of the wine equalisation tax (WET).

Refunds are subject to several conditions, including that you must:

  • Have bought the goods no more than 30 days before your departure.
  • Take the goods with you as carry-on luggage when you leave.
  • Spend $300 or more in the one store and ask the retailer for a single tax invoice to cover all items.

Present your passport, original tax invoice, international boarding pass and the goods to the Customs Officer at the TRS facility in your departure airport.
Remember, there are limits on the quantity of goods you’re allowed to bring back into Australia duty and/or tax-free. Along with any duty-free items bought here before leaving and overseas, items bought under the TRS are included when determining your duty-free allowance. Goods for which a TRS claim has been approved must be declared to Customs on your return to Australia.


For more information on the Tourist Refund Scheme, go to the Australian Customs Service website.