Legal & Regulatory

Australia is a Safe and Reliable Partner

There are very few concerns in Australia regarding issues of legal and regulatory transparency. Traditionally in terms of investment, Australia has always been a nation which not only welcomes foreign investment but actively encourages it, with its liberal and transparent screening process for incoming investment proposals. It is very rare that the Government will even consider blocking proposals, and this is only the case where the future investment has been determined by the Foreign Investment Review Board (FIRB) to be contrary to the national interest. However, some restrictions may apply in sectors considered to be ‘sensitive’, such as in residential real estate, banking, media, telecommunications, shipping, civil aviation and airports. [1]

Customs and Duties

Australia has a rigorous set of customs clearance regulations and procedural requirements that e-retailers should educate themselves on prior to commencing trade. It is recommended that e-retailers seek professional advice from Licensed Customs Brokers or Freight forwarders especially for those transactions over $1000 AUD.

Within Australia customs clearance is strictly exercised and occurs before goods are released to the purchaser/owner from clearance centres. As Australia is surrounded by water without physical borders with other countries, all goods are imported either by Sea, or Air Cargo or International Post (the carrier of which is Australia Post within Australia). Therefore Ports, Airports are the entry points for Cargo (the majority of which are in Metropolitan Cities) into Australia with clearance centres (licensed depots and warehouses being situated around these areas).

Generally speaking all declarations, permits, taxes and duties are the responsibility of the owner/ purchaser of the goods and must be provided and paid prior to goods being released. There is some variation depending on the value of the goods whether they are a B2C or B2B arrangement. [2]

The Value of Goods

E-Retailers should note that the process for customs clearance on goods purchased via B2B or B2C channels varies depending on value; with the threshold being $1,000AUD.

B2B and B2C Goods under $1000 AUD

The majority of overseas internet transactions will be B2C, under $1000 AUD and will be delivered by International Post (the carrier being Australia Post within Australia). A customs broker would not be required. These goods may be imported free of customs duties and taxes (except Alcohol and Tobacco) with only a parcel declaration needing to be completed. Australia Post will deliver the goods straight to the consumer. A permit is required for restricted goods. 

For goods being delivered via air freight or sea freight, the system is slightly more complex with the same rules applying except these goods must be reported to Customs and Border Protection on a Self-Assessed Clearance (SAC) declaration. SAC declarations are usually made on the consumers behalf by the freight forwarder handling the consignment but sometimes the supplier may be required to make a SAC declaration. SAC declarations can only be made electronically to Customs and Border Protection via the Integrated Cargo System (ICS). The owner may need to use a licensed customs broker or service provider to make SAC declarations on a fee for service basis. B2C and B2B Goods over $1000 AUD. [3]

Goods over the value of a $1,000

These goods will require an Import Declaration to be lodged electronically via the Customs Integrated Cargo System (ICS). Duty and/or taxes will more than likely be payable. The responsibility for this sits with the owner of the goods. This could be the a) consumer purchasing over the internet from the supplier (B2C); b) One business from another ( B2B); or c) one business importing containers into Australia to distribute through a physical presence i.e. either online or via a retail outlet. [4]

According to Customs law, an owner of imported goods may be the importer, someone who holds themselves out to be the owner, someone who has a beneficial interest in the goods or someone who has control of the goods. Note that there is no requirement for companies or individuals to hold an import license, however, they must be able to have a good understanding of Australian Customs law, permits, prohibited goods, product labelling requirements and information on tariffs and hence duties and taxes available as well access to the ICS system. Many choose to have a licensed customs broker facilitate the Import Declaration and assist in dealing with all obligations with the importation of their goods. Brokers provide their services on a fee for service basis. Employees may also act on an owner’s behalf to make import declarations provided they are not also an employee of another entity. [31]

When goods are imported they will be assessed for customs duty and Goods and Services Tax (GST) of 10%. The rate of duty depends on the nature of the goods and is determined by the Tariff classification of the goods (Customs Tariff Act 1995). The duty, if any, is calculated on the customs value of the goods. The customs value is usually the price paid and converted to Australian dollars. Customs and Border Protection may require the owner to produce receipts or invoices etc. to substantiate that the customs value claimed applies. GST (at a rate of 10%) is also calculated on the Value of the Taxable Importation known as the VoTI. The VoTi is the sum of: • the customs value • any duty payable; and • The amount paid or payable to transport the goods to Australia and to insure the goods for that transport. To obtain a Tariff Classification and an exact duty rate, refer to the Customs Tariff. [5]

E-Retailers should note that the process for customs clearance on goods purchased via B2B or B2C channels varies depending on value; with the threshold being $1,000AUD.

B2B and B2C Goods under $1000 AUD

The majority of overseas internet transactions will be B2C, under $1000 AUD and will be delivered by International Post (the carrier being Australia Post within Australia). A customs broker would not be required. These goods may be imported free of customs duties and taxes (except Alcohol and Tobacco) with only a parcel declaration needing to be completed. Australia Post will deliver the goods straight to the consumer. A permit is required for restricted goods. [28]

For goods being delivered via air freight or sea freight, the system is slightly more complex with the same rules applying except these goods must be reported to Customs and Border Protection on a Self-Assessed Clearance (SAC) declaration. SAC declarations are usually made on the consumers behalf by the freight forwarder handling the consignment but sometimes the supplier may be required to make a SAC declaration. SAC declarations can only be made electronically to Customs and Border Protection via the Integrated Cargo System (ICS). The owner may need to use a licensed customs broker or service provider to make SAC declarations on a fee for service basis. B2C and B2B Goods over $1000 AUD. [29]

Goods over the value of a $1,000

These goods will require an Import Declaration to be lodged electronically via the Customs Integrated Cargo System (ICS). Duty and/or taxes will more than likely be payable. The responsibility for this sits with the owner of the goods. This could be the a) consumer purchasing over the internet from the supplier (B2C); b) One business from another ( B2B); or c) one business importing containers into Australia to distribute through a physical presence i.e. either online or via a retail outlet. [30]

According to Customs law, an owner of imported goods may be the importer, someone who holds themselves out to be the owner, someone who has a beneficial interest in the goods or someone who has control of the goods. Note that there is no requirement for companies or individuals to hold an import license, however, they must be able to have a good understanding of Australian Customs law, permits, prohibited goods, product labelling requirements and information on tariffs and hence duties and taxes available as well access to the ICS system. Many choose to have a licensed customs broker facilitate the Import Declaration and assist in dealing with all obligations with the importation of their goods. Brokers provide their services on a fee for service basis. Employees may also act on an owner’s behalf to make import declarations provided they are not also an employee of another entity. [31]

When goods are imported they will be assessed for customs duty and Goods and Services Tax (GST) of 10%. The rate of duty depends on the nature of the goods and is determined by the Tariff classification of the goods (Customs Tariff Act 1995). The duty, if any, is calculated on the customs value of the goods. The customs value is usually the price paid and converted to Australian dollars. Customs and Border Protection may require the owner to produce receipts or invoices etc. to substantiate that the customs value claimed applies. GST (at a rate of 10%) is also calculated on the Value of the Taxable Importation known as the VoTI. The VoTi is the sum of: • the customs value • any duty payable; and • The amount paid or payable to transport the goods to Australia and to insure the goods for that transport. To obtain a Tariff Classification and an exact duty rate, refer to the Customs Tariff.[32]

Sources

  1. E-Commerce Worldwide and Nora. "Australian Passport 2015"
  2. E-Commerce Worldwide and Nora. "Australian Passport 2015"
  3. E-Commerce Worldwide and Nora. "Australian Passport 2015"
  4. E-Commerce Worldwide and Nora. "Australian Passport 2015"
  5. E-Commerce Worldwide and Nora. "Australian Passport 2015"
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