Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the best destination to work. With regards to cross-border trade, the nation ranked 91st from 190 countries on the planet Bank’s Simplicity 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 a solid idea of how its numerous customs and trading rules connect with them.
“The best bet for the majority of Australian businesses, particularly Australian SME, would be to utilize a logistics provider who are able to handle the heavier complexities with 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, now you may learn an ample amount of the basics to look at their cross-border operations to a higher level.” Listed below are five quick lessons to have any business started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, for the products you can choose from as well as the goods they import. Any GST that the business pays can be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can just not pay the tax as an alternative to needing to claim it back, under what the ATO is the term for as “GST deferral”. However, your company have to be registered not only for GST payment, but in addition for monthly Business Activity Statements (BAS) to get 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 up to monthly BAS reporting, specially those who’ve saddled with greater common quarterly schedule so far.”
Duty is 5% and pertains to goods value while GST is 10% and applies to amount goods value, freight, insurance, and duty
SMEs must ensure they are fully aware the difference between duties as well as the GST.
2. Changes on the LVT (Low Value Threshold)
Alternatives, Australia had the best Low-Value Threshold (LVT) for imported goods on the planet, exempting most waste $1000 and below from GST. That’s set to switch from 1 July 2018, because the Govt looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with under AU$75,000 in turnover shouldn’t be affected by the modifications.
“Now how the legislation continues to be undergone Parliament, Australian businesses should start getting ready for the changes at some point,” counsels Somerville. “Work with your overseas suppliers on registering for a Vendor Registration Number (VRN) together with the ATO, familiarize yourselves with how to remit GST after charging it, and make preparations to include it into your pricing models.”
The new legislation requires eligible businesses to join up with the ATO for any Vendor Registration Number (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment towards the consumer at the Pos, then remitting it towards the ATO regularly.
3. Repairs and Returns
“Many businesses arrive at us with questions on whether they’re responsible for import duty and tax after they send the products 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 ask them is: do you think you’re conducting the repairs under warranty?”
In case your business repairs or replaces an item included in its warranty obligations, you have to pay neither duties nor taxes about the product – provided that your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make certain you continue to enter a “Value for Customs” – whatever you paid to generate the item originally – inside your documents.
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