Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the best location to trade. With regards to cross-border trade, the continent ranked 91st out of 190 countries in the World Bank’s Simplicity of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To be successful in Australia, goods-based businesses need a solid understanding of how its numerous customs and trading rules connect with them.
“The best option for many 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, everyone can learn an ample amount of the fundamentals to consider their cross-border operations to a higher level.” Listed below are five quick lessons to get any business started:
1. GST (and its deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, for the products they sell along with the goods they import. Any GST that the business pays may be claimed back as a refund from Australian Tax Office (ATO). Certain importers, however, can just never pay the tax as an alternative to needing to claim it back, under just what the ATO is the term for as “GST deferral”. However, your small business have to be registered not just for GST payment, but also for monthly Business Activity Statements (BAS) to get entitled to 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 change onto monthly BAS reporting, specifically those who have tied to the harder common quarterly schedule until recently.”
Duty is 5% and refers to goods value while GST is 10% and applies to amount goods value, freight, insurance, and duty
SMEs need to ensure they know the gap between duties along with the GST.
2. Changes for the LVT (Low Value Threshold)
As yet, 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 alter from 1 July 2018, since the Government looks to scrap the LVT for many 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 the legislation has become passed through Parliament, Australian businesses should start be prepared for the changes as soon as possible,” counsels Somerville. “Work along with your overseas suppliers on subscribing to a Vendor Number plate (VRN) together with the ATO, familiarize yourselves with how you can remit GST after charging it, and prepare to feature it to your pricing models.”
The brand new legislation requires eligible businesses to subscribe with all the ATO to get a Vendor Registration Number (VRN), used to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment on the consumer in the Pos, then remitting it on the ATO on a regular basis.
3. Repairs and Returns
“Many businesses arrive at us with questions about whether they’re answerable for import duty and tax whenever they send their goods 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 should instead inquire is: are you conducting the repairs under warranty?”
Should your business repairs or replaces a product as part of its warranty obligations, you pay neither duties nor taxes around the product – provided that 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 – with your documents.
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