Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the easiest destination to do business. When it comes to cross-border trade, the country ranked 91st out of 190 countries on the planet Bank’s Ease of Working 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 knowledge of how its numerous customs and trading rules connect with them.
“The best choice for some Australian businesses, particularly Australian SME, is to work with a logistics provider that can 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 some effort though, you can now learn enough of the basics to consider their cross-border operations one stage further.” Here are five quick lessons to have service repair shop started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, about the products you can purchase and also the goods they import. Any GST that the business pays might be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily not pay the tax rather than needing to claim it back, under what are the ATO describes as “GST deferral”. However, your small business should be registered not only for GST payment, but also for monthly Business Activity Statements (BAS) to become eligible 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 up to monthly BAS reporting, particularly those who’ve tied to the more common quarterly schedule so far.”
Duty is 5% and applies to goods value while GST is 10% and relates to quantity of goods value, freight, insurance, and duty
SMEs should make sure they understand the difference between duties and the GST.
2. Changes for the LVT (Low Value Threshold)
Until recently, Australia had the very best Low-Value Threshold (LVT) for imported goods on earth, exempting most pieces of $1000 and below from GST. That’s set to switch 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 that this legislation continues to be undergone Parliament, Australian businesses should start get yourself ready for the modifications eventually,” counsels Somerville. “Work together with your overseas suppliers on taking a Vendor Number plate (VRN) using the ATO, familiarize yourselves with how you can remit GST after charging it, and make preparations to incorporate it in your pricing models.”
The brand new legislation requires eligible businesses to register together with the ATO for the Vendor Number plate (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are accountable for 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 queries about whether they’re accountable for import duty and tax whenever they send their items 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: have you been conducting the repairs under warranty?”
In case your business repairs or replaces an item in its warranty obligations, you spend neither duties nor taxes on the product – so 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” – everything you paid to make them originally – in your documents.
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