Top things every importer and exporter business owner should know
Tips for importers and exporters
Are you an importer or exporter?
If you or your business imports or exports goods and services, then you will want to know the ins and outs of how Australian tax, duties, labeling laws and consession schemes applies. It's important to stay in the know with the answers to these common import and export questions.
For more help or information on any of these issues, feel free to call us on 1300 96 25 95 or alternatively contact us.
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Confirm your goods can be imported
Before you start importing your products, it’s important to understand regulations and laws that govern them.
Australia’s Customs department provides a guide to goods that are prohibited and restricted from import and export. Australia regulates products in many industries, including children’s products, furniture, vehicles and chemicals in consumer products. If items you are considering to import are restricted, you may still be able to import them, but you’ll need to get a permit, license, or other approval from a relevant government agency. For additional information into that process, you can contact the Customs Information and Support Centre by phone at +612 6275 6666 (1300 363 263 within Australia) or via e-mail at email@example.com.
To confirm your merchandise aren’t banned from entering Australia on origin grounds, you’ll need to investigate the country of manufacture and the location from which it will be shipped to Australia. Determining where a product originated is also necessary in determining eligibility for benefits such as reduced rates of duty. For example, if your goods are from the United States, Australian Customs provides a sample to use as a guide for making a preferential duty rate claim.
Can your goods be imported
When importing to Australia, the importer is responsible for guaranteeing consistency with all mandatory product safety standards, and compliance procedures.
For many products, you can easily assess the mandatory regulations on Government websites. The framework is relatively straightforward.
However, what is far more complex is to find out if an overseas manufacturer has the ability to consistently comply with Australian product standards and guidelines.
Normally, a supplier compliance assessment is based on checking existing compliance documents. However, this strategy is very hard to do for Australian importers – simply because so few overseas suppliers can provide documents proving compliance with Australian standards and regulations.
That said, it’s far more likely that a supplier can provide compliance documents valid in the EU or US.
Hence, Australian importers must research which EU or US standards correspond to their own, and then ask for these documents instead.
If you are in the Apparel industry and want to assess a supplier’s capability to provide AZO free fabrics, you can just ask for an EU REACH SVHC test report.
If you’re importing bicycle helmets, in which case you must ensure compliance with AS/NZS 2063:2008 – Bicycle helmets, you should look-up the corresponding EN, ISO or ASTM standard.
Truth be told, Australian product standards are in many cases entirely based on standards developed in the European Union and the United States.
Note: A list of regulated products is available on Productsafety.gov.au. However, this site does not include electronic product standards and regulations.
Labelling Requirements for Importers
Australian importers must also ensure that the product, and its packaging, is correctly labelled. There are various types of labelling requirements for Australian importers to keep track of:
a. AS/NSZ Labelling Requirements (as part of specific product standards)
b. Ingredients Labelling (mandatory for cosmetics and certain other products)
c. Country of Origin (Required for food products and imported goods that require a ‘trade description’)
d. Care Labelling (for apparel and other textiles)
e. RCM Mark (Replacing the A-Tick and C-Tick mark on electronic products)
Note that there is no uniform set of labelling requirements, applicable to all products. As such, you must confirm the labelling requirements that apply to your product.
Don’t assume that your supplier is even aware of the applicable labelling requirements. As such, you must provide them with ‘ready made’ artwork and labelling files.
How do I pay my suppliers?
Do I need to pay income tax on exports?
If you export goods or services and you’re an Australian resident entity, your export income is generally subject to income tax. This is because your assessable income includes your world-wide income.
However, if you derive income from another country and pay tax in that country, you might be qualified to a foreign income tax offset against your Australian income tax.
When is foreign income exempt from Australian tax?
Foreign income your company earns may be exempt from Australian tax if it derives income by carrying on business at or through a permanent establishment in the other country. The source of income is generally the place where the:
-contract is entered into, in the case of goods
-services are performed, in the case of services.
If you’re exporting goods by selling them to a foreign resident entity on a free on board (FOB) basis in Australia, the place of contract is likely to be in Australia. If you export to a country that has a tax treaty with Australia, the treaty may have special rules to help you determine the source of the income. You can find more information and a list of Australia’s established tax treaties at What are tax treaties
How do I get paid for my exports?
When are goods and services subject to GST?
When importing or exporting goods and services you may be subject to GST. GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia and also on most imports of goods. Generally, once you are registered for GST you will include GST in the price of supplies to your customers and claim credits for the GST included in the price of your business purchases.
Imported goods worth over A$1,000 generally has GST collected by the Department of Home Affairs when you, as the importer, collect your goods at the border unless you are registered under the deferred GST scheme. When GST on a taxable importation is applied at the border it is payable by businesses, organisations and private individuals – whether they are registered for GST or not. However, a GST-registered business may be able to claim a GST-credit for any GST paid on imported goods.
GST Import Cost Calculation
GST (10%) is calculated on top of the sum of the following:
Customs value (FOB Price) + Customs Duty + Shipping to Australia + Shipping Insurance
Below follows a Case study:
Customs value (FOB Price) = AU$50,000
Customs Duty = 5% x AU$50,000 = $2,500
Shipping = $3,000
GST = 10% x ($50,000 + $2,500 + $3,000 + $120) = AU$5,562
What is the deferred GST scheme?
The deferred GST scheme allows you to defer the payment of GST on taxable importations until the first activity statement you lodge after the goods are imported. To participate in the scheme you must:
-have an ABN
-be registered for GST
-lodge your activity statements online
-lodge your activity statements monthly
-make your activity statement payments electronically.
You may not be eligible for the deferred GST scheme if:
-you or any of your related entities are not up to date with your tax returns or payments
-you or anyone relevant to the application has, in the past three years, been convicted or penalised by a court for specific offences.
For taxable imports, an assessment of GST, luxury car tax (LCT) or wine equalisation tax (WET) payable is made when a declaration has been received by the Department of Home Affairs and they have provided a declaration advice. Together these documents form the assessment notice.
How is GST applied on low value imported goods?
As of 1 July 2018, GST generally applies to supplies of low value imported goods (worth less than A$1,000). This law is designed so that non-resident businesses:
-will not charge GST on a sale when GST will be charged at the border, because an item is worth over A$1,000, a tobacco product, or an alcoholic beverage
-will not need to charge GST on a sale if it is clear that multiple goods will be shipped to Australia in one consignment worth over A$1,000 – GST will be charged at the border instead
-will not need to charge GST on a sale of low value imported goods to Australian GST-registered business if they provide their Australian business number (ABN) and confirmation that they are GST-registered.
Does GST apply to imported services and digital products?
GST also applies to sales of imported services and digital products made to Australian consumers when overseas businesses meet the A$75,000 registration threshold.
Duty rates vary between 0% to 10%. However, most products imported from China to Australia, are taxed at around 5%.
The Customs duty is calculated on top of the customs value:
Customs Duty = X.X% x Customs Value
Assuming a rate of 5%, and a Customs value of $50,000, you’ll pay AU$2,500.
You may submit a customs declaration directly to the authorities (electronic or paper filing), or get help to do this from your freight forwarder.
Import Processing Charge
The Import Processing Charge is based on the customs value.
However, unlike the Customs duty rate, the Import Processing Charge is not calculated as a percentage on the Customs value – but instead a fixed cost.
Below follows an overview.
FOB Value: AU$1,000 to AU$10,000
Manual Declaration: AU$90
Electronic Declaration: AU$50
FOB Value: Above AU$10,000
Manual Declaration: AU$192
Electronic Declaration: AU$152
Previously, the Import Processing Charge also depended on the mode of transportation (i.e., whether the shipment is delivered by Air or Sea). However, that is no longer the case.
What are the different types of letters of credit?
Import Licenses and Permits
Import licences or special permits are generally not required for most consumer products. However, there are strict requirements in place for importing animals, plants, controlled substances and certain equipment.
How does GST apply to exports?
Exports of goods from Australia are generally GST-free if they are exported from Australia before or within 60 days of the first of the following two events:
the supplier receives any payment for the goodsthe supplier issues an invoice for the goods.
In the case of exporting goods paid for in instalments, the payment referred to is the final instalment and the invoice referred to is the invoice for the final instalment. In some cases you can apply to the ATO to extend the 60-day period.
Other exports, such as services, various rights, financial supplies and other professional services can have specific rules to determine when they are GST-free or if they are excluded from being treated as GST-free. The ATO also recommends that you review the rules on importing and exporting from the Department of Home Affairs and the Department of Agriculture and Water Resources.
Make sure to stay aware of your status as an exporter. A change of international commercial (Inco) delivery terms could mean you’re no longer being considered as an exporter and GST may become payable on the supply.
After reviewing your international cross border transactions you may discover mistakes in your reported GST amounts. If this occurs, the ATO encourages you to make a voluntary disclosure. More information is available at Make a voluntary disclosure.
How do GST-free sales to travellers departing Australia work?
Duty-free shops are able to sell GST-free goods to travellers leaving Australia. Generally, GST-free goods sold to outbound travellers must be placed in a sealed bag. You can also use the sealed bag method to sell wine without wine equalisation tax (WET). GST-free goods sold or delivered to travellers after they have passed through the border clearance area don’t need to be placed in a sealed bag. You can find out more at GST-free sales to travellers departing Australia.
Concession Schemes for Importers
The Department of Home Affairs administers a number of schemes and local manufacturers. The schemes include allowing the importation of goods at free or concessional rates and the deferment of duty payment.
The Tarrif Concession System is a mechanism for granting a Tariff Concession Order to allow concessional entry of imported goods where no substitutable goods are produced in Australia.
The Enhanced Project By-Law Scheme provides tariff duty concessions on eligible capital goods of significant sized projects in the mining, resource processing, food processing, food packaging, manufacturing, agriculture and gas supply industry sectors.
The Certain Inputs to Manufacture (CIM) Program provides import duty concessions on certain imported raw materials, intermediate goods as well as prescribed metal materials and goods.
The Tradex Scheme provides relief to persons or organisations via an up-front exemption from customs duty and GST on imported goods intended for re-export or to be used as inputs to exports. The Scheme removes the need to 'drawback' these charges after export.
To learn more on Concession Schemes you can go to Department of Home Affairs
At Just Business Financial Services we know what importers and exporters need from their business bankers. With our extensive network of financial institutions specialising in the international trade space we, are able to provide the best service and the most competitive prices. That’s why all our import and export services are designed to help you trade with assurance. If you would like advice on how to navigate through the banking lingo, call us on 1300 96 25 95 or alternatively contact us.
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