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When running a business, there are several taxes that you may be legally responsible for paying. It is important to understand what tax you need to pay to ensure that you are complying with all of your obligations. If your startup is importing goods into Australia, you may need to pay a number of fees, including customs duty and goods and services tax (GST). This article will explain import duties and taxes and when your startup may have to pay them.

What Are Import Duties and Taxes?

Import duties and taxes are generally charged to anyone who is importing goods into Australia. The two most common costs that your startup may be liable for, in relation to its imports, are customs duty and GST. You will need to pay these taxes for any goods that you import into Australia, unless an exemption or concession applies.

Customs duty and GST are two separate costs that the government calculates and charges independently from the other. Your startup may be liable to pay only customs duty or only GST, or may be responsible for paying both.

When Do I Have to Pay Import Duties and Taxes?

In most cases, any goods that you import into Australia are liable for import duties and taxes unless an exemption applies. If your startup is importing goods with a value over the low goods threshold (currently AUD$1,000), you will need to lodge an Import Declaration.

Import Declaration

An Import Declaration contains details about the goods that you are importing and you need to lodge it electronically. You will need to provide information about your startup, the goods you are importing and their value, among others. The Import Declaration form that you need to complete will depend on how you are importing the goods into Australia. There is a different form for goods that arrive by sea or air as opposed to goods that arrive into Australia by post.

Exceptions to Import Duties

If your startup imports goods with a value below the low goods threshold of $1,000, then you will be exempt from paying import duty on these goods. You will need to complete a Self Assessed Clearance declaration (SAC declaration) to clear these goods through the Australian Customs and Border Protection (CBP). You must complete the SAC electronically. Any goods that you import into Australia by post do not require a SAC declaration.

Importantly, this applies to all goods except for:

  • tobacco;
  • tobacco products; or
  • alcoholic beverages.

If your startup is importing goods that fall into any of these categories, then you will generally need to pay customs duty, regardless of the value of the import.

GST

You will generally need to pay GST on most imports into Australia, even in situations where you do not need to pay customs duty. If the value of your imports is less than $1,000 then you may not need to pay tax and therefore GST. This depends on a number of other circumstances including who your startup is ultimately selling the goods to. However, if you are required to pay tax on the import, then you will be liable to pay GST regardless of whether your startup is registered for GST. However, if your startup is registered for GST, then you may be able to claim GST credits for the GST that you pay on the imported goods.

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How Does the Government Calculate Import Duties and Taxes?

Import duty is calculated as a percentage of the total price that you paid for the imported goods. The percentage that will apply depends on the nature of the goods and the category of the product you are importing. However, the range is up to 10%. The Australian Border Force provides a list of the classification of goods and their associated tax rates on their website.

The amount of GST you need to pay will be 10% of the value of the goods you imported that is subject to tax. The government calculates this value by adding together;

  • the customs value of the goods;
  • the customs duty payable (if any); and
  • other additional amounts that apply only in certain circumstances (for example, whether the goods are being held in the process of delivering them or if wine tax is payable).

How and When Do I Pay Import Duties and Taxes?

If your startup is importing goods into Australia, it is good practice to consider using an agent to assist with your payment of import taxes. These agents can lodge the appropriate forms on your behalf and assist your startup with its requirements when importing goods.

For GST, the assessment of the amount of GST you need to pay is made when the Department of Home Affairs receives the declaration and they provide their declaration advice. You will then receive it in the form of an assessment notice.

If your startup imports goods and you are registered for GST, there are situations in which you will be able to defer the payment of GST until you lodge your activity statement. To be eligible for this deferral, your startup must meet a number of criteria. To check whether your startup is eligible, you can find more information about the eligibility criteria here.

Key Takeaways

When your startup imports goods into Australia, you should consider your responsibility to pay customs duty and GST. You need to pay customs duty and GST to the government based on the value of your startup’s import. Whether you need to pay customs duty or GST is a matter that is specific to your startup’s circumstances, including the:

  • specifics of your business;
  • type of goods that you are importing; and
  • value of the goods.

You should ensure that you obtain specific advice on what duties and taxes your startup is liable for and ensure that you comply with your obligations. There are licensed brokers who can assist you with confirming the duties and taxes that you are liable for and they can assist in facilitating the payment process. If you have any questions or want to know more about your startup’s specific obligations when importing goods, you can contact LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page.

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