Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always the easiest destination to work. In relation to cross-border trade, the united states ranked 91st from 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 in Australia, goods-based businesses need to have a solid comprehension of how its numerous customs and trading rules apply to them.
“The best option for most Australian businesses, particularly Australian SME, is 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 some effort though, anyone can learn an ample amount of the basics to consider their cross-border operations to the next level.” Allow me to share five quick lessons to have any company started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, on the products you can choose from plus the goods they import. Any GST a business pays might be claimed back as a refund from Australian Tax Office (ATO). Certain importers, however, can easily avoid paying the tax as an alternative to having to claim it back, under what the ATO is the term for as “GST deferral”. However, your company have to be registered not merely for GST payment, but in addition monthly Business Activity Statements (BAS) to get qualified to receive 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 modify to monthly BAS reporting, in particular those that have tied to the harder common quarterly schedule until now.”
Duty is 5% and pertains to goods value while GST is 10% and relates to amount of goods value, freight, insurance, and duty
SMEs must be sure they do know the gap between duties and also the GST.
2. Changes on the LVT (Low Value Threshold)
As yet, Australia had the very best Low-Value Threshold (LVT) for imported goods in the world, exempting most components of $1000 and below from GST. That’s set to switch from 1 July 2018, since the Federal Government looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t have the modifications.
“Now the legislation has been passed through 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) with all the ATO, familiarize yourselves with the best way to remit GST after charging it, and make preparations to include it into your pricing models.”
The newest legislation requires eligible businesses to register with all the ATO to get a Vendor Number plate (VRN), used 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 on a regular basis.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re accountable for import duty and tax when 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 should instead ask them is: do you think you’re conducting the repairs under warranty?”
If your business repairs or replaces a product in its warranty obligations, you make payment for neither duties nor taxes about the product – provided that your documentation reflects this. Add the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you will still enter a “Value for Customs” – everything you paid to create the product originally – inside your documents.
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