Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the best place to conduct business. When it comes to cross-border trade, the country ranked 91st 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 succeed in Australia, goods-based businesses need a solid knowledge of how its numerous customs and trading rules connect with them.
“The best bet for the majority of Australian businesses, particularly logistics lessons, is to make use of a logistics provider who can handle the heavier complexities of the customs clearance process on their behalf,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, you can now learn enough of the basic principles to look at their cross-border operations to the next level.” Listed below are five quick lessons to have any company started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, around the products they offer and also the goods they import. Any GST that a business pays could be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily never pay the tax as opposed to having to claim it back, under what are the ATO is the term for as “GST deferral”. However, your organization should be registered not just for GST payment, but in addition for monthly Business Activity Statements (BAS) to get eligible for 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 modify over to monthly BAS reporting, in particular those who may have saddled with the more common quarterly schedule so far.”
Duty is 5% and applies to goods value while GST is 10% and pertains to amount of goods value, freight, insurance, and duty
SMEs need to ensure they understand the gap between duties along with the GST.
2. Changes on the LVT (Low Value Threshold)
Up to now, Australia had the greatest Low-Value Threshold (LVT) for imported goods on earth, exempting most pieces of $1000 and below from GST. That’s set to improve from 1 July 2018, as the Govt looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t have modifications.
“Now how the legislation continues to be passed through Parliament, Australian businesses should start be prepared for the changes at some point,” counsels Somerville. “Work using your overseas suppliers on subscribing to a Vendor Registration plate (VRN) with all the ATO, familiarize yourselves with the best way to remit GST after charging it, and make preparations to add it into the pricing models.”
The new legislation requires eligible businesses to subscribe using the ATO for the Vendor Number plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers have the effect of GST payment for the consumer on the Pos, then remitting it towards the ATO regularly.
3. Repairs and Returns
“Many businesses arrive at us with questions about whether they’re accountable for import duty and tax once they send their products and services 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 question them is: are you conducting the repairs under warranty?”
If the business repairs or replaces a product in its warranty obligations, you 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 make certain you’ll still enter a “Value for Customs” – whatever you paid to produce the item originally – inside your documents.
For details about Australian SME see this site: click for more