Despite being probably the most attractive export markets in Asia Pacific, Australia isn’t always the simplest location to work. In terms of cross-border trade, the continent ranked 91st beyond 190 countries on the planet Bank’s Ease of Working report for 2017 – well below other regional powerhouses like Singapore, Hong Kong, and Japan. To achieve Australia, goods-based businesses require a solid idea of how its numerous customs and trading rules affect them.
“The best choice for most Australian businesses, particularly logistics lessons, is always to start using a logistics provider who is able to handle the heavier complexities of the customs clearance process for the children,” says Ben Somerville, DHL Express’ Senior Manager of Customs & Regulatory Affairs for Oceania. “With some effort though, you can now learn motor the basic principles to look at their cross-border operations to a higher level.” Allow me to share five quick lessons to acquire any business started:
1. GST (as well as deferral)
Most Australian businesses will face the 10% Products or services Tax, or GST, about the products you can choose from plus the goods they import. Any GST which a business pays may be claimed back like a refund from Australian Tax Office (ATO). Certain importers, however, can merely avoid paying the tax rather than being forced to claim it back, under just what the ATO refers to as “GST deferral”. However, your business should be registered not only for GST payment, but also for monthly Business Activity Statements (BAS) being 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 exchange to monthly BAS reporting, particularly those who have stuck with the harder common quarterly schedule until recently.”
Duty is 5% and relates to goods value while GST is 10% and pertains to sum of goods value, freight, insurance, and duty
SMEs must ensure they know the main difference between duties and also the GST.
2. Changes to the LVT (Low Value Threshold)
Alternatives, Australia had the greatest Low-Value Threshold (LVT) for imported goods on the globe, exempting most waste $1000 and below from GST. That’s set to change from 1 July 2018, because Federal Government 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 have modifications.
“Now that the legislation may be undergone Parliament, Australian businesses should start get yourself ready for the modifications sooner rather than later,” counsels Somerville. “Work along with your overseas suppliers on becoming a member of a Vendor Number plate (VRN) with all the ATO, familiarize yourselves with the way to remit GST after charging it, and make preparations to include it to your pricing models.”
The new legislation requires eligible businesses to join up with all the ATO for any Vendor Registration Number (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment to the consumer on the Point of Sale, then remitting it to the ATO on a regular basis.
3. Repairs and Returns
“Many businesses come to us with questions regarding whether they’re accountable for import duty and tax whenever 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 need to ask them is: do you think you’re conducting the repairs under warranty?”
In case your business repairs or replaces something included in its warranty obligations, you spend neither duties nor taxes on the product – as long as 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” – whatever you paid to generate them originally – with your documents.
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