WHILE there are no registration requirements for taxable importations, GST is pay-able by the importer on taxable importations of goods.
The rate of GST for imported goods is 10 per cent of their value. The value of the imported goods is determined by: the customs value of the goods; the cost of transportation and insurance for the goods during that transportation to Australia insofar as it is not already included in the customs value; and any customs duty payable on the importation of the goods.
An input tax credit is available for imported goods under similar rules to those for input tax credits on the acquisition of other goods.
GST can be deferred on imported goods under the GST Deferred Scheme, which was adopted jointly by the Australian Customs Service and the Australian Taxation Office. The scheme allows an importer to defer payments of GST on taxable importations to coincide with payments of net amounts of GST.
In order to use the GST Deferred Scheme, an importer must seek approval and be registered with the ATO.
Under the scheme, there is no GST cash related outlay on the receipt of imported goods – the GST Deferred Scheme negates any adverse cash flow impact associated with taxable importations by allowing the GST component to be offset.
Deferral of GST on imports is limited to those goods imported for home consumption at the time of importation.
However, certain goods are excluded from the scheme, including those goods that already have deferred duty and GST. These include goods imported under the TRADEX scheme that are diverted for home consumption are excluded, along with goods that are subject to customs warehousing arrangements.
Low value imports are also excluded from the scheme as they are cleared on informal documents.
However, the importer must meet certain requirements as set out in the GST Deferred Scheme.
These requirements include that: the importer must be registered for GST and apply to the ATO for approval to take part in the GST Deferred Scheme; the importer must lodge GST returns on a monthly basis; the importer must lodge the returns with the ATO and customs electronically; and the importer must have a good compliance record.
St George Bank National manager for trade and finance sales, Christopher Jacobs, said while the implications of the GST for an importer were purely concerned with cash flow, consulting with a bank’s trade division can assist in achieving specific outcomes from any trade transaction.
Banks can assist with short-term finance for between 90 and 180 days to assist importers finance transactions until taking delivery of the goods.
Post-shipment finance has the advantage of improving an importer’s cash flow by allowing goods to be to sold prior to payment being made, and at the same time provides a negotiating advantage, as the importer can offer immediate payment.
Pre-shipment finance has the advantage of allowing the importer to meet any supplier requirements of up-front payment for manufacture or shipment of goods.
Mr Jacobs encouraged importers to talk to their banks if they were looking to achieve specific outcomes.
For example, if you are an Australian supplier who procures parts from a Chinese manufacturer, you may not want to disclose the identity of the Chinese manufacturer in trade documents so as to maintain their competitive advantage.
Mr Jacobs said banks also could assist in using the Uniform Customs and Practice for Documentary Credits (UCP500) and Incoterms 2000 issued by the International Chamber of Commerce to the customer’s advantage.
Additionally, Mr Jacobs said consulting with bank staff could ensure that all financial documentation, including Documentary Letters of Credit, were in order before proceeding with a trade transaction.
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