Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the simplest spot to conduct business. When it comes to cross-border trade, the continent ranked 91st away from 190 countries on earth Bank’s Simple Doing work report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses have to have a solid understanding of how its numerous customs and trading rules affect them.
“The best bet for the majority of Australian businesses, particularly Australian SME, is to work with a logistics provider who are able to 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 a little effort though, you can now learn motor basic principles to take their cross-border operations to another level.” Listed below are five quick lessons to acquire any company started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, around the products they sell as well as the goods they import. Any GST that the business pays can be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can simply never pay the tax instead of having to claim it back, under what the ATO refers to as “GST deferral”. However, your company should be registered not just for GST payment, but also 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 to monthly BAS reporting, specifically those who’ve stuck with greater 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 should make sure they understand the real difference between duties and the GST.
2. Changes to the LVT (Low Value Threshold)
Up to now, Australia had the highest Low-Value Threshold (LVT) for imported goods on the globe, 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 those B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t have the modifications.
“Now the legislation has been passed through Parliament, Australian businesses should start be prepared for the alterations as soon as possible,” counsels Somerville. “Work using your overseas suppliers on subscribing to a Vendor Registration plate (VRN) together with the ATO, familiarize yourselves with the best way to remit GST after charging it, and make preparations to incorporate it into the pricing models.”
The modern legislation requires eligible businesses to join up using the ATO for a Vendor Number plate (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment for the consumer at the Point of Sale, then remitting it for the ATO regularly.
3. Repairs and Returns
“Many businesses come to us with questions about whether they’re answerable for import duty and tax after they send their items 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 should instead inquire further is: do you think you’re conducting the repairs under warranty?”
If the business repairs or replaces a product or service included in its warranty obligations, you spend 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 make sure you still enter a “Value for Customs” – that which you paid to create the item originally – inside your documents.
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