Despite being the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple location to work. In relation to cross-border trade, the country ranked 91st away from 190 countries on the globe Bank’s Easy Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses require a solid comprehension of how its numerous customs and trading rules connect with them.
“The best option for many Australian businesses, particularly Australian SME, would be to utilize a logistics provider who is able to handle the heavier complexities of the customs clearance process for him or her,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, anyone can learn an ample amount of the basics to take their cross-border operations to a higher level.” Allow me to share five quick lessons to acquire any business started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, on the products they offer along with the goods they import. Any GST a business pays may be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can just avoid paying the tax as an alternative to being forced to claim it back, under what are the ATO refers to as “GST deferral”. However, your business have to be registered not merely for GST payment, but also for monthly Business Activity Statements (BAS) to become 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 exchange up to monthly BAS reporting, in particular those who have bound to the harder common quarterly schedule up to now.”
Duty is 5% and pertains to goods value while GST is 10% and relates to sum of goods value, freight, insurance, and duty
SMEs must be sure they do know the real difference between duties along with the GST.
2. Changes towards the LVT (Low Value Threshold)
Up to now, Australia had the very best Low-Value Threshold (LVT) for imported goods on earth, exempting most items of $1000 and below from GST. That’s set to change from 1 July 2018, as the Federal Government looks to scrap the LVT for those B2C (read: e-commerce) imports. B2B imports and B2C companies with below AU$75,000 in turnover shouldn’t be affected by the changes.
“Now the legislation continues to be passed through Parliament, Australian businesses should start preparing for modifications at some point,” counsels Somerville. “Work using your overseas suppliers on subscribing to a Vendor Registration plate (VRN) with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to add it in your pricing models.”
The modern legislation requires eligible businesses to subscribe using the ATO to get a Vendor Registration Number (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are accountable for GST payment on the consumer in the Point of Sale, then remitting it to the ATO often.
3. Repairs and Returns
“Many businesses come to us with queries about whether they’re liable 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 have to ask them is: are you conducting the repairs under warranty?”
If the business repairs or replaces something included in its warranty obligations, you make payment for neither duties nor taxes about the product – providing your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make sure you will still enter a “Value for Customs” – that which you paid to produce an item originally – inside your documents.
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