Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the best place to trade. In terms of cross-border trade, the country ranked 91st away from 190 countries on the globe Bank’s Simplicity of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To succeed in Australia, goods-based businesses need a solid knowledge of how its numerous customs and trading rules apply to them.
“The best bet for the majority of Australian businesses, particularly Australian SME, would be to work with a logistics provider that can handle the heavier complexities with the customs clearance process for the kids,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, now you may learn motor the basics to consider their cross-border operations to the next level.” Here are five quick lessons to obtain service repair shop started:
1. GST (and its particular deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, about the products they offer and also the goods they import. Any GST a business pays can be claimed back as 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 what are the ATO is the term for as “GST deferral”. However, your business should be registered not only for GST payment, but in addition monthly Business Activity Statements (BAS) to be 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 modify to monthly BAS reporting, particularly those who may have tied to the more common quarterly schedule so far.”
Duty is 5% and refers to goods value while GST is 10% and applies to sum of goods value, freight, insurance, and duty
SMEs must ensure they are fully aware the real difference between duties along with the GST.
2. Changes to the LVT (Low Value Threshold)
Up to now, Australia had the best Low-Value Threshold (LVT) for imported goods on the planet, exempting most components of $1000 and below from GST. That’s set to switch from 1 July 2018, since the Govt looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t have modifications.
“Now how the legislation continues to be undergone Parliament, Australian businesses should start preparing for the modifications eventually,” counsels Somerville. “Work with your overseas suppliers on becoming a member of a Vendor Number plate (VRN) with the ATO, familiarize yourselves with the best way to remit GST after charging it, and prepare to incorporate it into your pricing models.”
The newest legislation requires eligible businesses to register with all the ATO for any Vendor Registration Number (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment on the consumer with the Point of Sale, then remitting it for the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrived at us with questions about whether they’re accountable for import duty and tax when they send their goods abroad for repair, or receive items back from overseas customers for repair or replacement,” says Mike Attwood, Customs Duty Manager at DHL Express Australia. “The key question we must question them is: are you currently conducting the repairs under warranty?”
Should your business repairs or replaces a product or service as part of its warranty obligations, you spend neither duties nor taxes for the product – so long as your documentation reflects this. Add the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you will still enter a “Value for Customs” – what you paid to create the item originally – within your documents.
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