Import Tax & Import Duty Australia
Importing is often thought to be easier than exporting and perhaps in some ways it is but there are many traps for the unwary and inexperienced. It is important that you understand the basic steps
- Know your Import Tax & Import Duty liabilities on your imports into Australia
- Before thinking about placing an order on your overseas supplier, remember that you don’t have to be an expert in all facets of importing.
Professional advice is available from your Customs Broker or Forwarding Agent
- A useful way of gaining an insight into the processes involved in importing is to attend the International Trade (Import/Export) Course put on periodically by the College of International Business.
There are numerous reasons for importing goods. Perhaps you need to import a piece of capital machinery to be used in your company’s operations, or perhaps the imported goods are components or inputs to be used in a manufacturing process.
The most common reason is to import for resale (and this is the side of importing we will concentrate on). Whatever the reason, it is important that you accurately determine the landed cost, i.e. the cost of the goods delivered to your warehouse, before you place an Import order.
The list price of a product in Taiwan or China for example may seem unbelievably cheap, but with on-costs (e.g. freight, insurance, import duty, Gst tax, bank charges, interest, etc.) the product might not be competitive on the Australian market, even before allowing for your profit margin.
It is very important that you do your homework first. Having a good idea that there is a real potential market in Australia for the type of products you plan to import.
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When importing into Australia, you will be liable for the customs duty and various taxes as most imported goods are subject to duties and 10% goods and service tax.
All imported goods need to declared to Australia’s Customs & Border protection. The owner of the goods (this can be the actual owner, customs broker or someone that has control of the goods) needs to lodge an Import Declaration & declare the goods to customs.
There are many different regulations and sometimes complex duty rates applicable to imported cargo.The customs declaration must be lodged electronically via the department’s Integrated Cargo System (ICS). ** your freight forwarder or customs broker will be able to handle this for you.
Goods with a value under of a$1000
All cargo (except goods that arrive by post) is cleared from Customs and Border Protection by submitting a SAC declaration. In most cases your Freight Forwarder or Customs broker will make a SAC declaration on your behalf on a fee for service basis.
Customs Clearance with a value above a $1000
All goods imported into Australia by sea, air or post with a customs value that exceeds $1000.00 must be cleared by submitting a completed import declaration and paying duty, goods and services tax (GST) and other taxes and charges that apply & they all must be paid before the goods are cleared & released by Australian Customs.
How is the goods’ value calculated?
Most goods are valued by Customs & Border Protection at the their transaction value in Australian Dollars & Customs use the rate of exchange prevailing on the day of export of the goods (not on the day the goods arrive in Australia) as the exchange rate.
How is the amount of customs duty calculated?
The amount payable is determined by the classification of the goods and other factors including exemptions, concessions & existence of preference schemes (e.g. a Free Trade Agreement between the origin country & Australia).
When importing goods, the submission of the declaration to the ICS will automatically calculate any duty, GST, Wine Equalisation Tax or Luxury Car tax payments that are required.
A payment advice is then issued to the owner. Once settled, Customs will clear & release the goods. On most products imported into Australia, the customs duty is 5% of the value of the goods converted to Australian dollars, but this is dependent on the type of goods imported.
Is GST payable when importing goods?
Yes. besides a few exemptions for some basic foodstuffs, certain medical aids and appliances, precious metals and other items, most goods will be subject to GST when imported.
GST is applied at 10% of the Australian dollar value of the goods when imported.
The value of the imported goods is equal to the goods value (as detailed above), plus the duty payable, and any transport & insurance fees for the goods.To calculate the GST on imported goods, add the value of the goods in Australian dollars, plus freight, insurances and the import duty. The 10% GST is calculated on this total.
For example, if you purchase calculators for AUD$500, add the 5% customs duty $25 plus the cost of freight and insurances, say at $42. This gives a total of $567 plus a 10% GST of $56.70. The total cost of goods equals approximately $623.70.
To get the correct import duty and GST totals for imported goods, we recommend contacting a customs broker or freight forwarder who will be able to help.