Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always the easiest location to do business. When it comes to cross-border trade, the country ranked 91st beyond 190 countries on earth Bank’s Ease of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses need a solid knowledge of how its numerous customs and trading rules sign up for them.
“The best bet for most Australian businesses, particularly logistics lessons, is to work with a logistics provider who can handle the heavier complexities from the customs clearance process for the children,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, everyone can learn motor the basics to look at their cross-border operations to another level.” Allow me to share five quick lessons to have any organization started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, on the products they offer as well as the goods they import. Any GST which a business pays might be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can merely never pay the tax as opposed to the need to claim it back, under just what the ATO describes as “GST deferral”. However, your business have to be registered not just for GST payment, but in addition monthly Business Activity Statements (BAS) to get eligible for deferrals.
“You don’t reduce any costs by deferring your GST, but you will simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to modify to monthly BAS reporting, in particular those that have saddled with the more common quarterly schedule so far.”
Duty is 5% and pertains to goods value while GST is 10% and applies to sum of goods value, freight, insurance, and duty
SMEs need to ensure they are fully aware the difference between duties as well as the GST.
2. Changes towards the LVT (Low Value Threshold)
Until recently, Australia had the greatest Low-Value Threshold (LVT) for imported goods in the world, exempting most pieces of $1000 and below from GST. That’s set to change from 1 July 2018, because Govt looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t be affected by the alterations.
“Now the legislation has been passed through Parliament, Australian businesses should start get yourself ready for modifications sooner rather than later,” counsels Somerville. “Work with your overseas suppliers on registering for a Vendor Number plate (VRN) together with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to add it to your pricing models.”
The modern legislation requires eligible businesses to join up together with the ATO for a Vendor Registration plate (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment to the consumer in the Point of Sale, then remitting it on the ATO regularly.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re answerable for import duty and tax once they send the products abroad for repair, or receive items away from overseas customers for repair or replacement,” says Mike Attwood, Customs Duty Manager at DHL Express Australia. “The key question we should instead inquire is: do you think you’re conducting the repairs under warranty?”
In case your business repairs or replaces something included in its warranty obligations, you spend neither duties nor taxes about the product – so long as your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you’ll still enter a “Value for Customs” – everything you paid to create them originally – in your documents.
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