Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple location to work. When it comes to cross-border trade, the continent ranked 91st out of 190 countries in the World Bank’s Simple Doing work report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses require a solid understanding of how its numerous customs and trading rules affect them.
“The best bet for many Australian businesses, particularly Australian SME, would be to make use of a logistics provider who are able to handle the heavier complexities with the customs clearance process for the kids,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, anyone can learn enough of the basics to look at their cross-border operations to another level.” Listed below are five quick lessons to obtain any organization started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, on the products you can choose from and also the goods they import. Any GST that the business pays might be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can merely avoid paying the tax as opposed to having to claim it back, under what the ATO refers to as “GST deferral”. However, your organization must be registered not simply for GST payment, but in addition for monthly Business Activity Statements (BAS) to be entitled to 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 change over to monthly BAS reporting, specifically those who may have bound to greater common quarterly schedule until now.”
Duty is 5% and applies to goods value while GST is 10% and applies to quantity of goods value, freight, insurance, and duty
SMEs need to ensure they do know the difference between duties and the GST.
2. Changes towards the LVT (Low Value Threshold)
Up to now, Australia had the best Low-Value Threshold (LVT) for imported goods in the world, exempting most items of $1000 and below from GST. That’s set to alter from 1 July 2018, since the Govt looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with below AU$75,000 in turnover shouldn’t have the modifications.
“Now the legislation may be undergone Parliament, Australian businesses should start be prepared for the alterations eventually,” counsels Somerville. “Work with your overseas suppliers on registering for a Vendor Number plate (VRN) with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to include it in your pricing models.”
The modern legislation requires eligible businesses to sign up with all the ATO to get a Vendor Number plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment towards the consumer on the Point of Sale, then remitting it for the ATO regularly.
3. Repairs and Returns
“Many businesses arrived at us with questions about whether they’re liable 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 need to question them is: are you conducting the repairs under warranty?”
If the business repairs or replaces something as part of its warranty obligations, you spend neither duties nor taxes about the product – providing your documentation reflects this. Are the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make certain you will still enter a “Value for Customs” – that which you paid to generate them originally – in your documents.
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