Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the best destination to do business. In terms of cross-border trade, the united states ranked 91st out of 190 countries in the World Bank’s Easy 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 knowledge of how its numerous customs and trading rules connect with them.
“The best bet for most Australian businesses, particularly Australian SME, 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 some effort though, now you may learn motor the basics to look at their cross-border operations to a higher level.” Listed below are five quick lessons to get any company started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, on the products you can choose from along with the goods they import. Any GST that the business pays may be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can easily not pay the tax instead of needing to claim it back, under just what the ATO describes as “GST deferral”. However, your company have to be registered not merely for GST payment, also for monthly Business Activity Statements (BAS) to get 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 change over to monthly BAS reporting, particularly those who’ve saddled with the more common quarterly schedule up to now.”
Duty is 5% and refers to goods value while GST is 10% and pertains to quantity of goods value, freight, insurance, and duty
SMEs must be sure they know the main difference between duties along with the GST.
2. Changes on the LVT (Low Value Threshold)
As yet, Australia had the highest Low-Value Threshold (LVT) for imported goods in the world, exempting most components of $1000 and below from GST. That’s set to improve from 1 July 2018, because Federal Government looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with under AU$75,000 in turnover shouldn’t be affected by the alterations.
“Now the legislation may be passed through Parliament, Australian businesses should start be prepared for the alterations sooner rather than later,” counsels Somerville. “Work together with your overseas suppliers on registering for a Vendor Number plate (VRN) with the ATO, familiarize yourselves with how you can remit GST after charging it, and make preparations to include it into your pricing models.”
The new legislation requires eligible businesses to subscribe using the ATO for a Vendor Registration Number (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment towards the consumer with the Point of Sale, then remitting it towards the ATO on a regular basis.
3. Repairs and Returns
“Many businesses visit us with questions about whether they’re liable for import duty and tax whenever they send their goods 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 should instead question them is: have you been conducting the repairs under warranty?”
In case your business repairs or replaces a product in its warranty obligations, you spend neither duties nor taxes about the product – so long as your documentation reflects this. Are the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you will still enter a “Value for Customs” – that which you paid to generate an item originally – inside your documents.
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