Despite being just about the most attractive export markets in Asia Pacific, Australia isn’t always the best destination to conduct business. When it comes to cross-border trade, the nation ranked 91st from 190 countries on earth Bank’s Simplicity of Conducting business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve in Australia, goods-based businesses require a solid comprehension of how its numerous customs and trading rules apply to them.
“The best bet for many Australian businesses, particularly logistics lessons, is usually to start using a logistics provider who is able to handle the heavier complexities of 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 motor basic principles to look at their cross-border operations one stage further.” Allow me to share five quick lessons to get any business started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, on the products you can purchase along with 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 never pay the tax as opposed to the need to claim it back, under exactly what the ATO identifies as “GST deferral”. However, your organization should be registered not only for GST payment, but in addition monthly Business Activity Statements (BAS) to get entitled to 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 switch to monthly BAS reporting, specifically those who have bound to greater common quarterly schedule up to now.”
Duty is 5% and refers to goods value while GST is 10% and relates to amount goods value, freight, insurance, and duty
SMEs should make sure they know the gap between duties as well as the GST.
2. Changes to the LVT (Low Value Threshold)
Alternatives, Australia had the best Low-Value Threshold (LVT) for imported goods on earth, exempting most waste $1000 and below from GST. That’s set to improve from 1 July 2018, as the Federal Government looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with below AU$75,000 in turnover shouldn’t be affected by the modifications.
“Now that this legislation continues to be undergone Parliament, Australian businesses should start preparing for the changes sooner rather than later,” counsels Somerville. “Work using your overseas suppliers on subscribing to a Vendor Registration plate (VRN) with all the ATO, familiarize yourselves with how to remit GST after charging it, and prepare to feature it into your pricing models.”
The modern legislation requires eligible businesses to join up with all the ATO to get a Vendor Registration plate (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers have the effect of GST payment towards the consumer on the Point of Sale, then remitting it to the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrive at us with questions regarding whether they’re liable for import duty and tax after 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: do you think you’re conducting the repairs under warranty?”
Should your business repairs or replaces a product or service included in its warranty obligations, you make payment for neither duties nor taxes around the product – as long as your documentation reflects this. Range from the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make sure you continue to enter a “Value for Customs” – what you paid to make the product originally – within your documents.
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