Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the easiest spot to do business. With regards to cross-border trade, the nation ranked 91st away from 190 countries on the planet 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 need a solid understanding of how its numerous customs and trading rules connect with them.
“The best bet for the majority of Australian businesses, particularly Australian SME, would be to utilize a logistics provider that can handle the heavier complexities from 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, anyone can learn motor basic principles to take their cross-border operations to another level.” Allow me to share five quick lessons to obtain any organization 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 as well as the goods they import. Any GST that the business pays might be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can easily never pay the tax instead of having to claim it back, under what are the ATO is the term for as “GST deferral”. However, your business must be registered not merely 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 will simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to switch over to monthly BAS reporting, specially those that have tied to the more common quarterly schedule until now.”
Duty is 5% and applies to goods value while GST is 10% and pertains to quantity of goods value, freight, insurance, and duty
SMEs must ensure they do know the difference between duties along with the GST.
2. Changes for the LVT (Low Value Threshold)
Until recently, 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, since the Govt 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 passed through Parliament, Australian businesses should start be prepared for the modifications eventually,” counsels Somerville. “Work using your overseas suppliers on taking a Vendor Number plate (VRN) with all the ATO, familiarize yourselves with how to remit GST after charging it, and prepare to include it into your pricing models.”
The new legislation requires eligible businesses to register with all the ATO for the Vendor Registration plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are accountable for GST payment on the consumer on the Pos, then remitting it to the ATO on a regular basis.
3. Repairs and Returns
“Many businesses come to us with questions on whether they’re answerable for import duty and tax when they send the products 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 have to inquire is: are you currently conducting the repairs under warranty?”
Should your business repairs or replaces a product in its warranty obligations, you make payment for neither duties nor taxes about the product – as long as your documentation reflects this. Add 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 create an item originally – with your documents.
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