Despite being just about the most attractive export markets in Asia Pacific, Australia isn’t always the best spot to do business. When it comes to cross-border trade, the united states ranked 91st away from 190 countries on the globe Bank’s Simplicity of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses have to have a solid comprehension of how its numerous customs and trading rules connect with them.
“The best bet for many Australian businesses, particularly logistics lessons, is usually to work with a logistics provider who is 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 some effort though, anyone can learn an ample amount of the basics to take their cross-border operations to another level.” Here 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, for the products they sell and also the goods they import. Any GST a business pays may be claimed back being a refund from Australian Tax Office (ATO). Certain importers, however, can simply not pay the tax instead of being forced to claim it back, under just what the ATO describes as “GST deferral”. However, your small business should be registered not just for GST payment, but in addition for monthly Business Activity Statements (BAS) being qualified to apply for deferrals.
“You don’t reduce any costs by deferring your GST, but you do simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to modify onto monthly BAS reporting, specifically those that have saddled with the more common quarterly schedule until now.”
Duty is 5% and relates to goods value while GST is 10% and applies to quantity of goods value, freight, insurance, and duty
SMEs must ensure they are fully aware the difference between duties along with 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 planet, exempting most waste $1000 and below from GST. That’s set to change from 1 July 2018, as the Authorities 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 have the changes.
“Now how the legislation has been passed through Parliament, Australian businesses should start get yourself ready for the changes at some point,” counsels Somerville. “Work along with your overseas suppliers on registering for a Vendor Number plate (VRN) with all the ATO, familiarize yourselves with the way to remit GST after charging it, and make preparations to include it into your pricing models.”
The new legislation requires eligible businesses to register using the ATO for the Vendor Registration plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment towards the consumer at the Point of Sale, then remitting it for the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrive at us with queries about whether they’re liable for import duty and tax whenever they send their goods 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 inquire is: are you conducting the repairs under warranty?”
If the business repairs or replaces something within its warranty obligations, you spend neither duties nor taxes around the product – as long as your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you still enter a “Value for Customs” – everything you paid to generate an item originally – in your documents.
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