Despite being just about the most attractive export markets in Asia Pacific, Australia isn’t always the easiest spot to do business. In relation to cross-border trade, the country ranked 91st beyond 190 countries on earth Bank’s Simple Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses need to have a solid understanding of how its numerous customs and trading rules affect them.
“The best bet for some Australian businesses, particularly Australian SME, is always to make use of a logistics provider who is able to handle the heavier complexities of the customs clearance process for the children,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, now you may learn an adequate amount of basic principles to consider their cross-border operations to a higher level.” Allow me to share five quick lessons to obtain any company started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, for the products you can choose from plus the goods they import. Any GST that a business pays may be claimed back being a refund from Australian Tax Office (ATO). Certain importers, however, can simply not pay back the tax instead of the need to claim it back, under what are the ATO refers to as “GST deferral”. However, your organization has to be registered not only for GST payment, but in addition for monthly Business Activity Statements (BAS) being qualified to apply for deferrals.
“You don’t reduce any costs by deferring your GST, but you do simplify and streamline your cash-flow,” advises Somerville. “That may prove worthwhile for businesses to switch to monthly BAS reporting, in particular those that have saddled with greater common quarterly schedule so far.”
Duty is 5% and refers to goods value while GST is 10% and relates to amount of goods value, freight, insurance, and duty
SMEs must be sure they are fully aware the main difference between duties along with the GST.
2. Changes to the LVT (Low Value Threshold)
As yet, Australia had the best Low-Value Threshold (LVT) for imported goods on the planet, exempting most pieces of $1000 and below from GST. That’s set to switch from 1 July 2018, because the Govt looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t have modifications.
“Now that this legislation may be undergone Parliament, Australian businesses should start getting ready for the modifications eventually,” counsels Somerville. “Work with your overseas suppliers on taking a Vendor Number plate (VRN) using the ATO, familiarize yourselves with the way to remit GST after charging it, and make preparations to include it to your pricing models.”
The new legislation requires eligible businesses to register with all the ATO for any Vendor Registration Number (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment towards the consumer in the Pos, then remitting it towards the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrive at us with questions about whether they’re responsible for import duty and tax after they send their products and services 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 have to inquire further is: have you been conducting the repairs under warranty?”
In case your business repairs or replaces a product as part of its warranty obligations, you make payment for neither duties nor taxes about 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 sure you’ll still enter a “Value for Customs” – everything you paid to generate the item originally – in your documents.
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