Despite being the most attractive export markets in Asia Pacific, Australia isn’t always the easiest destination to do business. In relation to cross-border trade, the continent ranked 91st beyond 190 countries on earth Bank’s Simple Conducting business report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To be successful in Australia, goods-based businesses need to have a solid knowledge of how its numerous customs and trading rules connect with them.
“The best option for most Australian businesses, particularly Australian SME, would be to work with a logistics provider who can 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 the fundamentals to adopt their cross-border operations to the next level.” Listed here are five quick lessons to obtain service repair shop started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Services and goods Tax, or GST, around the products you can choose from as well as the goods they import. Any GST a business pays may be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can just not pay back the tax instead of the need to claim it back, under just what the ATO describes as “GST deferral”. However, your organization should be registered not simply for GST payment, but in addition monthly Business Activity Statements (BAS) to get qualified to receive 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 switch up to monthly BAS reporting, in particular those who’ve bound to greater common quarterly schedule so far.”
Duty is 5% and pertains to goods value while GST is 10% and applies to sum of goods value, freight, insurance, and duty
SMEs should make sure they are fully aware the difference between duties along with the GST.
2. Changes to the LVT (Low Value Threshold)
Up to now, Australia had the greatest Low-Value Threshold (LVT) for imported goods on the globe, exempting most items of $1000 and below from GST. That’s set to switch from 1 July 2018, because Govt looks to scrap the LVT for all those B2C (read: e-commerce) imports. B2B imports and B2C companies with less than AU$75,000 in turnover shouldn’t have the changes.
“Now how the legislation may be passed through Parliament, Australian businesses should start getting ready for the changes sooner rather than later,” counsels Somerville. “Work using your overseas suppliers on subscribing to a Vendor Number plate (VRN) using the ATO, familiarize yourselves with the best way to remit GST after charging it, and prepare to feature it in your pricing models.”
The new legislation requires eligible businesses to join up with all the ATO for any Vendor Number plate (VRN), utilized to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment on the consumer at the Point of Sale, then remitting it towards the ATO often.
3. Repairs and Returns
“Many businesses visit us with questions on whether they’re liable for import duty and tax once 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 have to inquire is: are you conducting the repairs under warranty?”
Should your business repairs or replaces a product or service included in its warranty obligations, you pay neither duties nor taxes around the product – providing your documentation reflects this. Are the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and be sure you still enter a “Value for Customs” – what you paid to make the product originally – within your documents.
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