Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always the best location to conduct business. In relation to cross-border trade, the united states ranked 91st out of 190 countries in the World Bank’s Ease of Conducting business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses need to have a solid understanding of how its numerous customs and trading rules apply to them.
“The best bet for the majority of Australian businesses, particularly logistics lessons, is always to start using a logistics provider that can handle the heavier complexities with 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 an adequate amount of basic principles to look at their cross-border operations to a higher level.” Here are five quick lessons to have service repair shop started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, around the products you can choose from along with the goods they import. Any GST a business pays may be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily avoid paying the tax as an alternative to needing to claim it back, under what are the ATO refers to as “GST deferral”. However, your company must be registered not just for GST payment, but also for monthly Business Activity Statements (BAS) being 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 exchange over to monthly BAS reporting, particularly those who’ve tied to the greater common quarterly schedule up to now.”
Duty is 5% and relates to goods value while GST is 10% and refers to quantity of goods value, freight, insurance, and duty
SMEs should make sure they understand the real difference between duties along with the GST.
2. Changes towards the LVT (Low Value Threshold)
Until recently, Australia had the best Low-Value Threshold (LVT) for imported goods on the globe, exempting most waste $1000 and below from GST. That’s set to alter from 1 July 2018, because Federal Government looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t have the modifications.
“Now that the legislation may be undergone Parliament, Australian businesses should start getting ready for the modifications at some point,” counsels Somerville. “Work using your overseas suppliers on becoming a member of a Vendor Registration Number (VRN) with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to incorporate it into your pricing models.”
The modern legislation requires eligible businesses to register together with the ATO for the Vendor Registration plate (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment on the consumer at the Point of Sale, then remitting it on the ATO on a regular basis.
3. Repairs and Returns
“Many businesses come to us with questions about whether they’re accountable for import duty and tax whenever they send their products and services 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 must ask them is: are you currently conducting the repairs under warranty?”
In case your business repairs or replaces an item within its warranty obligations, you make payment for neither duties nor taxes on the product – so 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 continue to enter a “Value for Customs” – what you paid to create them originally – within your documents.
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