Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the easiest location to conduct business. When it comes to cross-border trade, the continent 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 idea of how its numerous customs and trading rules apply to them.
“The best bet for most Australian businesses, particularly logistics lessons, would be to work with a logistics provider who can handle the heavier complexities from the customs clearance process for the children,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, anyone can learn an adequate amount of the fundamentals to take their cross-border operations one stage further.” Here are five quick lessons to get service repair shop started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, about the products they sell plus the goods they import. Any GST which a business pays could be claimed back being a refund from Australian Tax Office (ATO). Certain importers, however, can easily not pay the tax rather than having to claim it back, under what the ATO identifies as “GST deferral”. However, your small business should be registered not only for GST payment, but in addition monthly Business Activity Statements (BAS) to become entitled to 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 to monthly BAS reporting, specially those who have bound to the more common quarterly schedule until recently.”
Duty is 5% and pertains to goods value while GST is 10% and applies to amount of goods value, freight, insurance, and duty
SMEs should make sure they are fully aware the real difference between duties along with the GST.
2. Changes on the LVT (Low Value Threshold)
Up to now, Australia had the best Low-Value Threshold (LVT) for imported goods on earth, exempting most components of $1000 and below from GST. That’s set to alter 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 below AU$75,000 in turnover shouldn’t be affected by the modifications.
“Now the legislation may be passed through Parliament, Australian businesses should start be prepared for the alterations at some point,” counsels Somerville. “Work along with your overseas suppliers on taking a Vendor Registration plate (VRN) together with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to incorporate it to your pricing models.”
The modern legislation requires eligible businesses to join up with the ATO for the Vendor Registration Number (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment to the consumer on the Point of Sale, then remitting it towards the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrived at us with questions on whether they’re liable for import duty and tax once 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 should instead inquire further is: are you conducting the repairs under warranty?”
Should your business repairs or replaces something as part of its warranty obligations, you spend neither duties nor taxes about the product – as long as your documentation reflects this. Range from the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and be sure you will still enter a “Value for Customs” – whatever you paid to create the product originally – within your documents.
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