Despite being just about the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple place to work. With regards to cross-border trade, the country ranked 91st from 190 countries in the World Bank’s Simple Conducting business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses require a solid knowledge of how its numerous customs and trading rules apply to them.
“The best option for the majority of Australian businesses, particularly logistics lessons, is always to utilize a logistics provider who can handle the heavier complexities from 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, everyone can learn an adequate amount of basic principles to consider their cross-border operations one stage further.” Here are five quick lessons to have any organization started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, around the products they offer as well as the goods they import. Any GST which a business pays could be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily not pay the tax instead of the need to claim it back, under exactly what the ATO identifies as “GST deferral”. However, your business has to be registered not only for GST payment, also for monthly Business Activity Statements (BAS) to become qualified to apply for 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 to monthly BAS reporting, specifically those who’ve bound to the greater common quarterly schedule up to now.”
Duty is 5% and pertains to goods value while GST is 10% and refers to amount of goods value, freight, insurance, and duty
SMEs should make sure they know the difference between duties along with the GST.
2. Changes for the LVT (Low Value Threshold)
Up to now, Australia had the highest Low-Value Threshold (LVT) for imported goods on the globe, exempting most components of $1000 and below from GST. That’s set to switch from 1 July 2018, as the Federal Government looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with below AU$75,000 in turnover shouldn’t be affected by the alterations.
“Now how the legislation has become undergone Parliament, Australian businesses should start be prepared for the alterations sooner rather than later,” counsels Somerville. “Work using your overseas suppliers on taking a Vendor Registration Number (VRN) together with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to include it into your pricing models.”
The newest legislation requires eligible businesses to join up using the ATO for the Vendor Number plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are accountable for GST payment on the consumer with the Pos, then remitting it for the ATO often.
3. Repairs and Returns
“Many businesses visit us with questions on whether they’re accountable for import duty and tax once 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 currently conducting the repairs under warranty?”
Should your business repairs or replaces something within its warranty obligations, you pay neither duties nor taxes around the product – provided that your documentation reflects this. Range from the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and be sure you still enter a “Value for Customs” – everything you paid to generate the item originally – with your documents.
For details about Australian SME have a look at our resource: check here