Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the best place to do business. With regards to cross-border trade, the continent ranked 91st beyond 190 countries on earth Bank’s Easy Doing work report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses have to have a solid comprehension of how its numerous customs and trading rules sign up for them.
“The best bet for many Australian businesses, particularly Australian SME, would be to utilize 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 some effort though, anyone can learn an adequate amount of basic principles to look at their cross-border operations to the next level.” Allow me to share five quick lessons to obtain any organization started:
1. GST (and it is deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, for the products you can choose from plus the goods they import. Any GST which a business pays might be claimed back being a refund from Australian Tax Office (ATO). Certain importers, however, can merely never pay the tax as an alternative to the need to claim it back, under what the ATO describes as “GST deferral”. However, your business have to be registered not simply for GST payment, also for monthly Business Activity Statements (BAS) being 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, particularly those who may have tied to greater common quarterly schedule so far.”
Duty is 5% and relates to goods value while GST is 10% and relates to quantity of goods value, freight, insurance, and duty
SMEs need to ensure they understand the difference between duties along with the GST.
2. Changes towards the LVT (Low Value Threshold)
As yet, Australia had the highest Low-Value Threshold (LVT) for imported goods on earth, exempting most items of $1000 and below from GST. That’s set to alter from 1 July 2018, as the Federal Government looks to scrap the LVT for those B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t be affected by the changes.
“Now the legislation has been passed through Parliament, Australian businesses should start preparing for the changes at some point,” counsels Somerville. “Work with your overseas suppliers on becoming a member of a Vendor Registration Number (VRN) with the ATO, familiarize yourselves with how you can remit GST after charging it, and make preparations to feature it into the pricing models.”
The modern legislation requires eligible businesses to join up using the ATO for the Vendor Registration plate (VRN), accustomed to track GST payable on any overseas supplier’s goods. Suppliers have the effect of GST payment to the consumer in the Point of Sale, then remitting it for the ATO regularly.
3. Repairs and Returns
“Many businesses come to us with questions on whether they’re liable for import duty and tax after they send the products 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 further is: do you think you’re conducting the repairs under warranty?”
Should your business repairs or replaces an item in its warranty obligations, you spend neither duties nor taxes for the product – providing your documentation reflects this. Add the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and make sure you will still enter a “Value for Customs” – what you paid to make the item originally – with your documents.
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