Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the best destination to work. In relation to cross-border trade, the country ranked 91st from 190 countries in the World Bank’s Ease of Doing Business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To be successful in Australia, goods-based businesses require a solid understanding of how its numerous customs and trading rules apply to them.
“The best choice for most Australian businesses, particularly logistics lessons, is always to start using a logistics provider who is able to handle the heavier complexities of the customs clearance process for the kids,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, now you may learn motor basic principles to adopt their cross-border operations to a higher level.” Here are 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, on the products you can purchase along with the goods they import. Any GST that a business pays may be claimed back as a refund from Australian Tax Office (ATO). Certain importers, however, can simply not pay back the tax instead of being forced to claim it back, under what are the ATO is the term for as “GST deferral”. However, your company must be registered not just for GST payment, but 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 up to monthly BAS reporting, specially those who’ve saddled with the more common quarterly schedule until recently.”
Duty is 5% and relates to goods value while GST is 10% and applies to amount goods value, freight, insurance, and duty
SMEs must ensure they know the real difference between duties along with the GST.
2. Changes for the LVT (Low Value Threshold)
Up to now, Australia had the best Low-Value Threshold (LVT) for imported goods on the planet, exempting most components of $1000 and below from GST. That’s set to change from 1 July 2018, because the Federal Government 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 that this legislation has been undergone Parliament, Australian businesses should start getting ready for the alterations as soon as possible,” counsels Somerville. “Work together with your overseas suppliers on registering for a Vendor Registration plate (VRN) with the ATO, familiarize yourselves with how you can remit GST after charging it, and prepare to incorporate it to your pricing models.”
The new legislation requires eligible businesses to sign up using the ATO to get a Vendor Registration plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment towards the consumer in the Point of Sale, then remitting it towards the ATO regularly.
3. Repairs and Returns
“Many businesses arrive at us with questions on whether they’re liable for import duty and tax once 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 have to inquire is: are you currently conducting the repairs under warranty?”
In case your business repairs or replaces a product or service included in its warranty obligations, you make payment for neither duties nor taxes for the product – provided that your documentation reflects this. Are the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you still enter a “Value for Customs” – everything you paid to produce the item originally – with your documents.
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