Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the easiest spot to trade. When it comes to cross-border trade, the country ranked 91st beyond 190 countries on the globe Bank’s Ease of Conducting business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To be successful in Australia, goods-based businesses need a solid understanding of how its numerous customs and trading rules apply to them.
“The best bet for the majority of Australian businesses, particularly Australian SME, is usually to utilize a logistics provider who can handle the heavier complexities with the customs clearance process on their behalf,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, everyone can learn an adequate amount of the basics to adopt their cross-border operations one stage further.” Listed below are five quick lessons to have any organization started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, on the products they offer along with the goods they import. Any GST which a business pays could be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can easily never pay the tax instead of the need to claim it back, under just what the ATO refers to as “GST deferral”. However, your company have to be registered not simply for GST payment, but in addition monthly Business Activity Statements (BAS) being entitled to 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 exchange over to monthly BAS reporting, in particular those who may have saddled with the more common quarterly schedule up to now.”
Duty is 5% and pertains to goods value while GST is 10% and pertains to amount of goods value, freight, insurance, and duty
SMEs must be sure they know the real difference between duties and the GST.
2. Changes towards the LVT (Low Value Threshold)
Alternatives, Australia had the best Low-Value Threshold (LVT) for imported goods in the world, exempting most waste $1000 and below from GST. That’s set to alter from 1 July 2018, because Federal Government looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with under AU$75,000 in turnover shouldn’t have the changes.
“Now that this legislation continues to be undergone Parliament, Australian businesses should start get yourself ready for modifications sooner rather than later,” counsels Somerville. “Work along with your overseas suppliers on becoming a member of a Vendor Registration Number (VRN) together with the ATO, familiarize yourselves with how you can remit GST after charging it, and prepare to feature it into your pricing models.”
The brand new legislation requires eligible businesses to subscribe using the ATO to get a Vendor Registration Number (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment to the consumer at the Point of Sale, then remitting it towards the ATO frequently.
3. Repairs and Returns
“Many businesses arrived at us with questions on whether they’re liable 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 need to question them is: do you think you’re conducting the repairs under warranty?”
Should your business repairs or replaces a product in its warranty obligations, you make payment for neither duties nor taxes about the product – providing your documentation reflects this. Add the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make certain you still enter a “Value for Customs” – what you paid to produce the product originally – within your documents.
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