Tasmanian Freight Equalisation Scheme Information Paper
Incurred and paid the cost of shipping requirement
Application of incurred and paid the cost of shipping requirement
(Reference TFES Ministerial Directions 2.2.1-2.2.5)
The term ‘incurred and paid the cost of shipping’ refers to the person who has the ultimate
responsibility of bearing the cost of shipping.
The requirements for ‘incurred and paid the cost of shipping’ relate to the cost of shipping the goods
between:

Tasmania and the mainland; or

the main island of Tasmania and King Island; or

the main island of Tasmania and the Furneaux Group
Subclauses 2.2.2 and 2.2.3 of the Ministerial Directions (MDs) provide examples where a person is
taken not to have incurred and paid the cost of shipping. Any person that has or may have an
influence on setting the price for shipping the eligible goods is specifically barred by the MDs from
receiving TFES assistance.
Subclauses 2.2.4 and 2.2.5 of the MDs provide examples where a person may be taken to have
incurred and paid the cost of shipping. Evidence that the claimant has incurred and paid the cost of
shipping in relation to the shipment of the goods will be required. For example, the paid freight
invoice and the invoices to individual claimants from the claims agent if the claim has been submitted
by a claims agent.
Use of Claims Agents
The definition of ‘incurred and paid the cost’ has particular relevance to situations where an eligible
claimant engages a claims agent under Part 4 of the Directions to arrange the shipment of an eligible
good on the person’s behalf. Under this arrangement, the claims agent may organise shipment of the
goods and may initially pay the freight invoice on behalf of the person/client. However, the
person/client will still ultimately bear the cost of shipping the good as the person/client will have
received an invoice from the claims agent and would have paid the freight charges and any relevant
service fees. The claims agent would have recovered the cost of shipping it has paid from its client so
is therefore taken to have not incurred and paid the cost, and thereby not entitled to claim TFES
assistance.
Whoever incurs and pays the cost of shipping after the goods have been shipped to mainland
Australia is not relevant to the eligibility rules for assistance under the MDs.
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Exception
(Reference TFES Ministerial Directions 2.2.5)
The MDs provide an exception to ‘incurred and paid’ the cost of shipping provision. A seller of eligible
goods selling to a buyer may be taken to have ‘incurred and paid’ the cost of shipping even though
the buyer has actually incurred and paid the cost of shipping under the sales agreement between the
two parties, subject to the criteria in clause 2.2.5 of the Ministerial Directions being met. Evidence to
support a claim in these circumstances will be required. For example a letter or other written evidence
signed by both parties indicating that the seller will be eligible to receive the TFES assistance.
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