Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always the best spot to work. With regards to cross-border trade, the country ranked 91st beyond 190 countries on the globe Bank’s Ease of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses need to have a solid knowledge of how its numerous customs and trading rules connect with them.
“The best bet for most Australian businesses, particularly Australian SME, is usually to start using a logistics provider who can handle the heavier complexities with the customs clearance process on their behalf,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, now you may learn enough of the basic principles to adopt their cross-border operations to a higher level.” Allow me to share five quick lessons to have any business started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, about the products they sell plus the goods they import. Any GST that the business pays may be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can merely never pay the tax as an alternative to having to claim it back, under just what the ATO describes as “GST deferral”. However, your business should be registered not only for GST payment, also for monthly Business Activity Statements (BAS) being qualified to apply for 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 exchange to monthly BAS reporting, specially those who may have bound to greater common quarterly schedule until recently.”
Duty is 5% and pertains to goods value while GST is 10% and refers to amount goods value, freight, insurance, and duty
SMEs need to ensure they do know the difference between duties along with the GST.
2. Changes on the LVT (Low Value Threshold)
As yet, Australia had the very best 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, as the Govt looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with under AU$75,000 in turnover shouldn’t be affected by the alterations.
“Now how the legislation continues to be undergone Parliament, Australian businesses should start preparing for modifications as soon as possible,” counsels Somerville. “Work with your overseas suppliers on subscribing to a Vendor Number plate (VRN) using the ATO, familiarize yourselves with how you can remit GST after charging it, and make preparations to add it into the pricing models.”
The modern legislation requires eligible businesses to sign up with the ATO for any Vendor Registration plate (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers have the effect of GST payment towards the consumer on the Pos, then remitting it to the ATO on a regular basis.
3. Repairs and Returns
“Many businesses visit us with questions about whether they’re accountable for import duty and tax whenever they send the products 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 inquire further is: are you currently conducting the repairs under warranty?”
In case your business repairs or replaces a product included in its warranty obligations, you have to pay neither duties nor taxes about the product – providing your documentation reflects this. Add 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” – what you paid to produce the item originally – inside your documents.
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