A few Rapid Practices LESSONS FOR AUSTRALIAN SMES

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Despite being the most attractive export markets in Asia Pacific, Australia isn’t always easy and simple location to work. With regards to cross-border trade, the country ranked 91st out of 190 countries on the planet 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 a solid knowledge of how its numerous customs and trading rules sign up for them.


“The best bet for the majority of Australian businesses, particularly logistics lessons, is always to work with a logistics provider who is able to handle the heavier complexities from 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 motor the basic principles to look at their cross-border operations to another level.” Here are five quick lessons to get any business started:

1. GST (as well as deferral)

Most Australian businesses will face the 10% Services and goods Tax, or GST, about the products they offer plus the goods they import. Any GST that a business pays could be claimed back as being a refund from Australian Tax Office (ATO). Certain importers, however, can just not pay back the tax rather than the need to claim it back, under what the ATO is the term for as “GST deferral”. However, your small business has to be registered not merely for GST payment, also for monthly Business Activity Statements (BAS) to be qualified to receive 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 modify onto monthly BAS reporting, specifically those who have saddled with the more common quarterly schedule so far.”

Duty is 5% and applies to goods value while GST is 10% and relates to sum of goods value, freight, insurance, and duty

SMEs must ensure they are fully aware the gap between duties and the GST.

2. Changes to the LVT (Low Value Threshold)

Until recently, Australia had the best Low-Value Threshold (LVT) for imported goods on earth, exempting most components of $1000 and below from GST. That’s set to alter from 1 July 2018, because the Authorities looks to scrap the LVT for all B2C (read: e-commerce) imports. B2B imports and B2C companies with under AU$75,000 in turnover shouldn’t be affected by modifications.

“Now how the legislation continues to be passed through Parliament, Australian businesses should start get yourself ready for the modifications sooner rather than later,” counsels Somerville. “Work with your overseas suppliers on registering for a Vendor Registration Number (VRN) using the ATO, familiarize yourselves with the way to remit GST after charging it, and make preparations to incorporate it in your pricing models.”

The new legislation requires eligible businesses to join up with the ATO for the Vendor Registration plate (VRN), employed to track GST payable on any overseas supplier’s goods. Suppliers are responsible for GST payment on the consumer on the Point of Sale, then remitting it for the ATO frequently.

3. Repairs and Returns

“Many businesses arrive at us with queries about whether they’re liable for import duty and tax once 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 have to ask them is: are you conducting the repairs under warranty?”

If your business repairs or replaces an item included in its warranty obligations, you pay neither duties nor taxes on the product – so long as your documentation reflects this. Range from the words “Warranty Replacement” or “Repair”, record the item’s value as “No Charge”, and be sure you’ll still enter a “Value for Customs” – everything you paid to create them originally – with your documents.
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