Despite being just about the most attractive export markets in Asia Pacific, Australia isn’t always the best spot to trade. In terms of cross-border trade, the continent ranked 91st out of 190 countries on the planet Bank’s Simple Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To be successful in Australia, goods-based businesses require a solid knowledge of how its numerous customs and trading rules sign up for them.
“The best bet for many Australian businesses, particularly logistics lessons, is always to make use of a logistics provider who is able to handle the heavier complexities of the customs clearance process on their behalf,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With a little effort though, anyone can learn an ample amount of the basics to adopt their cross-border operations one stage further.” Listed here are five quick lessons to obtain any organization started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Goods and Services Tax, or GST, about the products they sell plus the goods they import. Any GST that a business pays could be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can simply never pay the tax rather than being forced to claim it back, under exactly what the ATO is the term for as “GST deferral”. However, your small business must be registered not just for GST payment, also for monthly Business Activity Statements (BAS) to be entitled to 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 to monthly BAS reporting, specially those who may have saddled with the more common quarterly schedule up to now.”
Duty is 5% and applies to goods value while GST is 10% and pertains to amount goods value, freight, insurance, and duty
SMEs need to ensure they know the real difference between duties along with the GST.
2. Changes towards the LVT (Low Value Threshold)
Until recently, Australia had the highest Low-Value Threshold (LVT) for imported goods on earth, exempting most components of $1000 and below from GST. That’s set to improve from 1 July 2018, since the Authorities looks to scrap the LVT for those B2C (read: e-commerce) imports. B2B imports and B2C companies with below AU$75,000 in turnover shouldn’t be affected by modifications.
“Now that the legislation has been passed through Parliament, Australian businesses should start be prepared for the changes as soon as possible,” counsels Somerville. “Work with your overseas suppliers on registering for a Vendor Registration plate (VRN) together with the ATO, familiarize yourselves with how to remit GST after charging it, and prepare to include it in your pricing models.”
The new legislation requires eligible businesses to join up with all the ATO for the Vendor Number plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment for the consumer on the Point of Sale, then remitting it to the ATO frequently.
3. Repairs and Returns
“Many businesses visit us with questions regarding whether they’re liable for import duty and tax when they send the products 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 question them is: are you conducting the repairs under warranty?”
If your business repairs or replaces a product or service within its warranty obligations, you make payment for neither duties nor taxes around the product – providing your documentation reflects this. Add the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and ensure you will still enter a “Value for Customs” – whatever you paid to create the item originally – inside your documents.
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