Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple spot to work. With regards to cross-border trade, the continent ranked 91st away from 190 countries on earth Bank’s Ease of Doing Business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To succeed in Australia, goods-based businesses have to have a solid idea of how its numerous customs and trading rules connect with them.
“The best option for most Australian businesses, particularly Australian SME, is usually to utilize a logistics provider who are able to 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 a little effort though, anyone can learn enough of the basics to consider their cross-border operations to another level.” Allow me to share five quick lessons to acquire service repair shop started:
1. GST (and its particular deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, about the products you can choose from as well as the goods they import. Any GST a business pays can be claimed back being a refund from Australian Tax Office (ATO). Certain importers, however, can simply not pay the tax as opposed to needing to claim it back, under just what the ATO describes as “GST deferral”. However, your company should be registered not only for GST payment, but in addition for monthly Business Activity Statements (BAS) being 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, specifically those who may have tied to the more common quarterly schedule up to now.”
Duty is 5% and applies to goods value while GST is 10% and pertains to amount of goods value, freight, insurance, and duty
SMEs must be sure they know the real difference between duties and also the GST.
2. Changes towards the LVT (Low Value Threshold)
Up to now, Australia had the highest Low-Value Threshold (LVT) for imported goods in the world, exempting most items of $1000 and below from GST. That’s set to change from 1 July 2018, as the Government looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t be affected by the modifications.
“Now how the legislation has been undergone Parliament, Australian businesses should start get yourself ready for the changes 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 the way to remit GST after charging it, and prepare to incorporate it in your pricing models.”
The brand new legislation requires eligible businesses to register with all the ATO for any Vendor Registration Number (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers lead to GST payment to the consumer on the Point of Sale, then remitting it towards the ATO often.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re responsible for import duty and tax once they send their items 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 must ask them is: are you currently conducting the repairs under warranty?”
In case your business repairs or replaces an item as part of its warranty obligations, you make payment for neither duties nor taxes around the product – as long as your documentation reflects this. Include the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make certain you’ll still enter a “Value for Customs” – everything you paid to create an item originally – inside your documents.
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