Friday, June 1, 2018

Australian Import Taxes Change for eCommerce Freight as Shipping and Removal Group Assists Emigrants

New Duties for Online Exporters and a Light Hearted Look at Moving Down Under
Shipping News Feature
AUSTRALIA – UK – Two pieces of news for exporters to the country as we see new tax laws for low value goods entering Australia to give domestic businesses Down Under a level playing field with importers of online freight purchases, whilst one British based removal group has partnered with 'I'm a Celebrity ... Get Me Out of Here!' star, Iain Lee, to put a fun twist on the rules and regulations of emigration via a series of videos.

Firstly those tax changes which come into force on July 1, from then eCommerce retailers wishing to explore the lucrative Australian market will soon be obliged to negotiate the new Australian Goods and Services Tax Act (GST). According to figures from the Office for National Statistics, Australia was the UK’s 16th largest export market in 2016, with £8.6 billion worth of goods and services accounting for 1.6% of total UK exports. The new goods and services tax is designed to give Australia’s domestic businesses a level-playing field in recognition of the continued growth of online sales.

Director of Basildon based International parcels specialist P2P Gary Tervit has passed on the information and tells us the GST regulations will apply to any business that sells more than A$75,000 of taxable supplies (including low value goods) a year to consumers in Australia. These rules also extend to electronic market place providers (or ‘electronic distribution platform’ providers such as eBay) and goods ‘re-deliverers’ (such as those that allow goods to be delivered to them from the seller within the sale jurisdiction before shipping them to Australia).

Such service providers are deemed to be the seller of the LVG, the sale of which is then deemed to be connected with Australia and the GST liability will move to these service providers. The threshold is independent of the delivery channel (postal or freight).

In the UK of course we see parallels with the imposition of the Fulfilment House Due Diligence Scheme, designed to snag billions currently lost in VAT revenue. As for Australia, as with many countries, imports of goods worth less than A$1000 were exempt from GST. Under the new legislation, clothing, books, electronic devices and sports equipment are among the goods subject to the tax, and Australian consumers will have to pay 10% GST on all online goods bought from overseas from July 1st onwards. As a barometer, Australians spent around $40 million on such items online in the last financial year.

As Gary Tervit points out, for UK retailers, sizing up new markets is the exciting part; dealing with local-country tax and duties is less than thrilling. Certainly, for smaller businesses, time and effort spent dealing with the detail of tax is considerable. Recent reports estimate that, in the UK, managing VAT compliance equates to an average of six working days annually. The Australian GST may not be as complex in comparison but such matters demand the attention of staff whose focus could be better targeted elsewhere.

As with the Fulfilment scheme which affects UK importers and overseas sellers alike, the new GST ruling places an administrative burden on overseas retailers looking to sell to Australia. These businesses will need to register for GST, they will need to charge GST on sales of low value imported goods, and they must lodge returns and remit the GST to the Australian Taxation Office (usually on a quarterly basis). Retailers will have to declare the 10% GST on receipt and commercial invoices to consignees.

As with any tax process there is pressure to ensure compliance, with penalties for businesses that don’t comply. While the Australian Tax Office (ATO) is expected to be cooperative during the transitional period, it has affirmed it will pursue those foreign sellers that do not attempt to comply in order to collect unpaid GST plus penalties.

Companies looking to export to Australia will necessarily partner with international providers who have experience of the regulations to avoid conflict with the tax authorities. Looking at Australia specifically, the best suppliers are simplifying the process for retailers, initiating the registration process and supporting the retailer through registration completion. Once done, this provides the retailer with the necessary GST reference number. The supplier will ensure that the retailer is 100% compliant and, beyond registration, will manage all ongoing reporting.

The onus is on retailers to ensure that additional information concerning the supply of low value goods is included within customs documentation at the time the goods are imported into Australia. Again, the supplier will manage this procedure accordingly. The supplier then invoices the retailer separately for the 10% GST sum and manages the equivalent payment to the ATO on behalf of the retailer. Gary Tervit concludes:

“Any changes to legislation can be off-putting to retailers looking to broaden their horizons. But there is no need for these ambitious businesses to go it alone. Working with the right partner can quickly and efficiently open up new markets, with the administrative burden transparently handled by third-party experts, enabling retailers to fully focus on driving sales and growth. Acting in partnership now can help retailers steal a march on those competitors still coming to terms with the nuances of the new GST system. As recent Australian online sales figures prove, the rewards are significant.”

On a lighter note one of the country’s longest established shipping and removals companies, Liverpool and London based John Mason International Movers has, as we say, linked up with celebrity Ian Lee in a bid to simplify the stressful process of relocating to Australia from the UK. In a series of videos (viewable here) Lee runs through a variety of situations including ‘Leave It Out’, which gives tips on what you can and can’t take with you down under.

These include homemade Christmas decorations, fur coats, wicker baskets and even Y-fronts! UK and Australian food also goes head-to-head in a ‘Blind Tucker Challenge’, where Marmite takes on Vegemite, Fuze Tea takes on PG Tips and Freddo bars battle Caramellos, and the cheeky DJ is also caught on camera in strawberry-gate round two (but without Amir Khan this time) for those familiar with his recent escapades on ITV. Simon Hood, sales and marketing director at John Mason International Movers, comments:

“With his popularity following ‘I’m a Celebrity Get Me Out of Here’, Iain is the perfect person to partner with to give our customers useful information and advice on emigrating to Australia, with a fun and fitting approach. We want to reach out to our customers in a way that gets the message across without daunting lists and rules, and with a large number of our customers being fans of the ITV show, this seemed like the perfect solution.

“The videos were shot in the Palm House at Kew Gardens and involved some strange props and contributors, including our jungle-savvy celebrity, three camera crew, one jungle outfit, a packet of Tim Tams, kangaroo meat, roast beef, a British flag, an Australian flag and even a pair of 8XL Y-fronts! The campaign was certainly a lot of fun to create and we hope people will have even more fun watching the videos and getting excited about their move down under.”