A mistake that is commonly made by first-time importers in Australia is with regards to the practice of keeping goods below the value of 1000.00 Australian Dollars (AUD) to be exempt from any import tax. While there is nothing wrong with that per se, the problems arise when first-timers think it is the only thing they need to know when dealing with import taxes in general.
That mindset may be helpful if you were just a consumer, but it may not be the case for even small-sized businesses who rely on importation and international logistics in their supply chain. Focusing only on that 1000.00 AUD limit often sets up an importer for unexpected delays and nasty surprises when there are still other factors to consider.
Here are several more that need planning for.
#1. Rate of exchange and day of import.
What it means: Customs and Border Protection calculate the value of incoming goods in Australian Dollars (AUD). This conversion happens first before applying anything else such as the import duty as well as the costs of freight and insurances. Furthermore, the rate of exchange that will be used in the calculation will actually be the one that was prevailing on the day of the export of goods and not on the day that the goods arrive on Australian borders.
Why it causes delays: Most importers are already aware of these two things but first-timers may not actually put them together. There is plenty room for miscalculations, from applying the import duty before the exchange rate to not doing any calculations at all until the goods arrive at port.
#2. Classifications of goods.
What it means: While the 1000.00 AUD maximum applies to a great majority of good, there are certainly exceptions. The most well-known ones are tobacco and alcoholic beverages. Duties and taxes will apply to goods like these and taxable classifications regardless of their value.
Why it causes delays: You can never be 100% sure that your imported goods can still be exempt until you double check or at least consult with a certified customs broker in Australia to verify their classification. Otherwise, there is a higher chance of taxes applying outside the importer’s expectation and failure to pay will definitely cause delays in shipment.
#3. Import Declaration forms required.
What it means: It is not enough for importers to just be able to pay customs when taxes start applying on their goods. An Import Declaration (N10 Form) will also be required in order to have the goods cleared.
Why it causes delays: The N10 isn’t just something one fills up on the spot. In it, the importer must provide detailed information on the goods such as the means they were transported, tariff classifications and, of course, additional information on customs value.
What Are Better Practices for Importers?
Take note that the above mentioned factors are just some of the numerous ways that can affect an importer’s duty amount payable for every shipment of goods. There is also no avoiding import taxes even if you are a first-timer who has not even registered for it.
Incidentally though, registration does open the door to better practices that can be considered to ensure that import taxes are processed and paid more smoothly.
The first would be Deferred Goods and Services Tax (GST) Scheme, along with Australia’s Free Trade Agreements. Opting for the scheme will result in taxable importations being deferred until the first business activity statement has been lodged after the goods have been imported.
Qualifying for the scheme is only a matter of meeting set requirements such as:
- Registering for GST.
- An active Australian Business Number (ABN).
- Lodging monthly activity statements (which can be done online).
- Payments for pay activity statements.
Asides from the schemes, first-time importers would also do well to consult licensed customs brokers and should even consider enlisting their services if they are still unfamiliar with the way import taxes work in Australia. They can also do the work of procuring the necessary Import Declaration forms and other documents, resulting in faster clearance and fewer unexpected delays.
Remember, there is always more to any form of tax than a well-known maximum or minimum value. Importers are no exception and must take greater measures when assessing the costs of tax on their goods.