Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple spot to trade. With regards to cross-border trade, the country ranked 91st out of 190 countries on the planet Bank’s Ease of Doing work report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To succeed in Australia, goods-based businesses require a solid comprehension of how its numerous customs and trading rules affect them.
“The best option for some Australian businesses, particularly logistics lessons, is to start using a logistics provider that can handle the heavier complexities in 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 motor the basic principles to take their cross-border operations to the next level.” Allow me to share five quick lessons to obtain any business started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, about the products they offer along with the goods they import. Any GST that a business pays could be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can just not pay back the tax as opposed to being forced to claim it back, under what are the ATO refers to as “GST deferral”. However, your small business has to be registered not just for GST payment, but also for monthly Business Activity Statements (BAS) to become qualified to apply 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 modify onto monthly BAS reporting, in particular those who may have saddled with the harder common quarterly schedule up to now.”
Duty is 5% and applies to goods value while GST is 10% and relates to quantity of goods value, freight, insurance, and duty
SMEs must ensure they are fully aware the main difference between duties and the GST.
2. Changes on the LVT (Low Value Threshold)
As yet, Australia had the very best Low-Value Threshold (LVT) for imported goods on the planet, exempting most items of $1000 and below from GST. That’s set to improve from 1 July 2018, because the Authorities 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 the legislation may be passed through Parliament, Australian businesses should start get yourself ready for the alterations at some point,” counsels Somerville. “Work together with your overseas suppliers on registering for a Vendor Registration Number (VRN) with all the ATO, familiarize yourselves with how you can remit GST after charging it, and make preparations to incorporate it in your pricing models.”
The newest legislation requires eligible businesses to join up using the ATO for a Vendor Number plate (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are accountable for GST payment on the consumer on the Point of Sale, then remitting it on the ATO regularly.
3. Repairs and Returns
“Many businesses visit us with queries about whether they’re responsible for import duty and tax whenever 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 ask them is: do you think you’re conducting the repairs under warranty?”
In case your business repairs or replaces a product included in its warranty obligations, you spend neither duties nor taxes about the product – provided that your documentation reflects this. Include 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 create an item originally – in your documents.
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