Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the easiest location to conduct business. In relation to cross-border trade, the country ranked 91st away from 190 countries on the globe Bank’s Easy 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 apply to them.
“The best bet for most Australian businesses, particularly logistics lessons, is always to start using a logistics provider that can handle the heavier complexities in 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 adequate amount of the fundamentals to adopt their cross-border operations one stage further.” Listed here are five quick lessons to obtain any organization started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, for the products they sell plus the goods they import. Any GST that a business pays might be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily avoid paying the tax instead of the need to claim it back, under what are the ATO is the term for as “GST deferral”. However, your organization must be registered not only for GST payment, also for monthly Business Activity Statements (BAS) to get 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 change to monthly BAS reporting, in particular those who’ve saddled with the more common quarterly schedule so far.”
Duty is 5% and relates to goods value while GST is 10% and refers to amount of goods value, freight, insurance, and duty
SMEs need to ensure they understand the difference between duties and the GST.
2. Changes on the LVT (Low Value Threshold)
Alternatives, Australia had the greatest Low-Value Threshold (LVT) for imported goods in the world, exempting most components of $1000 and below from GST. That’s set to alter from 1 July 2018, because Authorities looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t be affected by the changes.
“Now how the legislation may be passed through Parliament, Australian businesses should start preparing for the modifications sooner rather than later,” counsels Somerville. “Work using your overseas suppliers on taking a Vendor Registration Number (VRN) with all the ATO, familiarize yourselves with the best way to remit GST after charging it, and prepare to include it into your pricing models.”
The modern legislation requires eligible businesses to join up together with the ATO for the Vendor Registration plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment for the consumer on the Point of Sale, then remitting it towards the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrive at us with questions about whether they’re responsible for import duty and tax once 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 inquire further is: are you conducting the repairs under warranty?”
Should your business repairs or replaces a product included in its warranty obligations, you make payment for neither duties nor taxes around the product – providing your documentation reflects this. Add 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” – what you paid to make an item originally – with your documents.
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