Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the best spot to work. In terms of cross-border trade, the continent ranked 91st away from 190 countries in the World Bank’s Easy Doing Business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses need to have a solid knowledge of how its numerous customs and trading rules sign up for them.
“The best option for most Australian businesses, particularly Australian SME, is usually to make use of a logistics provider who are able to handle the heavier complexities from 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, you can now learn motor basic principles to adopt their cross-border operations to another level.” Allow me to share five quick lessons to have any company started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, about the products they sell along with the goods they import. Any GST a business pays may be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can merely avoid paying the tax instead of having to claim it back, under what are the ATO describes as “GST deferral”. However, your organization should be registered not just for GST payment, also for monthly Business Activity Statements (BAS) to get entitled to deferrals.
“You don’t reduce any costs by deferring your GST, but you do simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to change over to monthly BAS reporting, in particular those who’ve bound to the more common quarterly schedule until now.”
Duty is 5% and relates to goods value while GST is 10% and pertains to quantity of goods value, freight, insurance, and duty
SMEs must be sure they are fully aware the difference between duties and also the GST.
2. Changes on the LVT (Low Value Threshold)
As yet, Australia had the highest Low-Value Threshold (LVT) for imported goods on the planet, exempting most components of $1000 and below from GST. That’s set to improve from 1 July 2018, since the Authorities looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t have the alterations.
“Now the legislation has been undergone Parliament, Australian businesses should start preparing for the modifications as soon as possible,” counsels Somerville. “Work with your overseas suppliers on taking a Vendor Registration plate (VRN) with all the ATO, familiarize yourselves with how to remit GST after charging it, and prepare to include it into the pricing models.”
The brand new legislation requires eligible businesses to register with the ATO for the Vendor Registration Number (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment for the consumer in the Pos, then remitting it towards the ATO often.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re accountable for import duty and tax after 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 must inquire is: do you think you’re conducting the repairs under warranty?”
If the business repairs or replaces a product as part of its warranty obligations, you have to pay neither duties nor taxes around the product – providing your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and be sure you will still enter a “Value for Customs” – that which you paid to create the product originally – with your documents.
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