Despite being one of the most attractive export markets in Asia Pacific, Australia isn’t always the best place to do business. When it comes to cross-border trade, the continent ranked 91st from 190 countries in the World Bank’s Easy Working 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 option for many Australian businesses, particularly Australian SME, would be to utilize a logistics provider who is able to handle the heavier complexities in 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 adequate amount of basic principles to look at their cross-border operations to another level.” Listed here are five quick lessons to get service repair shop started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Products and services Tax, or GST, for the products you can purchase along with the goods they import. Any GST a business pays might be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can simply not pay the tax as opposed to needing to claim it back, under what are the ATO describes as “GST deferral”. However, your small business have to be registered not just for GST payment, but in addition monthly Business Activity Statements (BAS) to get qualified to apply for 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 exchange over to monthly BAS reporting, in particular those who’ve bound to the harder common quarterly schedule so far.”
Duty is 5% and applies to goods value while GST is 10% and refers to amount of goods value, freight, insurance, and duty
SMEs must be sure they understand the real difference between duties and also the GST.
2. Changes on the LVT (Low Value Threshold)
Up to now, Australia had the very best Low-Value Threshold (LVT) for imported goods on the globe, exempting most items of $1000 and below from GST. That’s set to change from 1 July 2018, since the Govt looks to scrap the LVT for many B2C (read: e-commerce) imports. B2B imports and B2C companies with lower than AU$75,000 in turnover shouldn’t have modifications.
“Now that the legislation has been undergone Parliament, Australian businesses should start be prepared for modifications as soon as possible,” counsels Somerville. “Work together with your overseas suppliers on becoming a member of a Vendor Number plate (VRN) using the ATO, familiarize yourselves with the best way to remit GST after charging it, and prepare to add it in your pricing models.”
The newest legislation requires eligible businesses to join up with all the ATO for any Vendor Number plate (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are accountable for GST payment on the consumer at the Point of Sale, then remitting it for the ATO frequently.
3. Repairs and Returns
“Many businesses visit us with questions on whether they’re answerable for import duty and tax when 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 should instead question them is: have you been conducting the repairs under warranty?”
If the business repairs or replaces an item as part of its warranty obligations, you make payment for neither duties nor taxes for the product – as long as your documentation reflects this. Are 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” – that which you paid to generate the item originally – with your documents.
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