Despite being the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple destination to do business. With regards to cross-border trade, the country ranked 91st from 190 countries on the globe Bank’s Simplicity of Doing work report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To succeed in Australia, goods-based businesses have to have a solid comprehension of how its numerous customs and trading rules affect them.
“The best bet for some Australian businesses, particularly logistics lessons, is usually to work with a logistics provider who can handle the heavier complexities from the customs clearance process for him or her,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, anyone can learn an ample amount of the basics to take their cross-border operations to another level.” Allow me to share five quick lessons to obtain service repair shop started:
1. GST (and its particular deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, about the products you can purchase plus the goods they import. Any GST a business pays can be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can easily not pay the tax rather than being forced to claim it back, under exactly what the ATO describes as “GST deferral”. However, your organization 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 do simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to modify over to monthly BAS reporting, specifically those who’ve stuck with the more common quarterly schedule up to now.”
Duty is 5% and relates to goods value while GST is 10% and refers to sum of goods value, freight, insurance, and duty
SMEs need to ensure they do know the gap between duties along with the GST.
2. Changes for the LVT (Low Value Threshold)
Up to now, Australia had the highest Low-Value Threshold (LVT) for imported goods on earth, exempting most components of $1000 and below from GST. That’s set to change from 1 July 2018, because the 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 have the alterations.
“Now that the legislation has been passed through Parliament, Australian businesses should start preparing for modifications eventually,” counsels Somerville. “Work using your overseas suppliers on taking a Vendor Number plate (VRN) with all the ATO, familiarize yourselves with how you can remit GST after charging it, and prepare to include it to your pricing models.”
The newest legislation requires eligible businesses to subscribe with all the ATO for any Vendor Registration plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment on the consumer at the Point of Sale, then remitting it to the ATO regularly.
3. Repairs and Returns
“Many businesses visit us with questions regarding whether they’re liable 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 need to inquire is: are you currently conducting the repairs under warranty?”
If your business repairs or replaces an item included in its warranty obligations, you spend neither duties nor taxes on 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” – what you paid to create the product originally – in your documents.
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