Despite being the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple destination to work. In terms of cross-border trade, the nation ranked 91st out of 190 countries on the globe Bank’s Ease of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To succeed in Australia, goods-based businesses need to have a solid understanding of how its numerous customs and trading rules connect with them.
“The best bet for many Australian businesses, particularly Australian SME, is always to utilize a logistics provider who are able to handle the heavier complexities of the customs clearance process for the children,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, you can now learn an ample amount of the fundamentals to look at their cross-border operations to a higher level.” Listed below are five quick lessons to have any organization started:
1. GST (and its particular deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, around the products they sell and also the goods they import. Any GST which a business pays may be claimed back as a refund from Australian Tax Office (ATO). Certain importers, however, can just never pay the tax as opposed to the need to claim it back, under exactly what the ATO identifies as “GST deferral”. However, your business should be registered not simply for GST payment, but in addition monthly Business Activity Statements (BAS) being 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 exchange up to monthly BAS reporting, specially those who may have bound to the harder common quarterly schedule so far.”
Duty is 5% and refers to goods value while GST is 10% and relates to quantity of goods value, freight, insurance, and duty
SMEs should make sure they do know the real difference between duties and the GST.
2. Changes on the LVT (Low Value Threshold)
Until recently, Australia had the highest Low-Value Threshold (LVT) for imported goods in the world, exempting most pieces of $1000 and below from GST. That’s set to switch from 1 July 2018, because Authorities looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t be affected by modifications.
“Now that this legislation has become passed through Parliament, Australian businesses should start getting ready for the changes at some point,” counsels Somerville. “Work using your overseas suppliers on becoming a member of a Vendor Registration Number (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 newest legislation requires eligible businesses to join up with the ATO for any Vendor Number plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment to the consumer on the Point of Sale, then remitting it for the ATO frequently.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re responsible for import duty and tax once they send their items 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: have you been conducting the repairs under warranty?”
If your business repairs or replaces an item as part of its warranty obligations, you have to pay neither duties nor taxes on the product – providing your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make sure you’ll still enter a “Value for Customs” – that which you paid to generate an item originally – with your documents.
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