0203 696 0980

Customs clearance overview

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.

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 (see list on previous page).

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

For goods over the value of a $1,000 the customs clearance system becomes slightly more complex again. 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.

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.

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.

Typical process with financial and logistics considerations involves:-

Check if goods are prohibited, or require a permit for completion and lodgement.

Assess value of goods under or over $1000 AUD.

Consider use of a licenced customs broker, and logistics carrier (Air, Sea or International Post).

Assess tariffs and hence duties payable and other taxes (GST, Wine Equalisation, Luxury Car, Other).

Engage Carrier / Logistics Solution.

Legal confirmation of goods for entry into the country: Import Declaration completed by importer submitted via ICS system; SAC declaration or Australia Post Declaration.

Confirmation of product prices: Calculation can be completed by Importer, confirmed via ICS system when goods arrived in Australia and cleared. Duties and Taxes are now payable.

Consider warehousing, storage and insurance fees.

Customs Clearance System

The customs clearance system largely relies on purchasers and importers self-declaring and regulating incorporating the paperwork and declaration process. Most goods are held up in the clearance process due to the assessment of value (over $1000 AUD), the goods being of a prohibited nature, incomplete paperwork or payment.

It takes up to five working days from receipt of completed documents for Customs to process the import declaration. It may also take up to three working days to process any payments made re duties and taxes with goods being held in a depot or warehouse. By Law this may happen indefinitely until payment is received, however the individual bonded warehouse or depot may have their own regulations, restrictions and fees for goods held. There are a number of service providers, such as wnDirect, that provide a ‘wheels-up’ clearance system whereby the required records are completed whilst the goods are in transit; speeding up the processing time on landing.

Notes:

B2C-International post where goods are held up to 30-45 days at Australia Post clearance centres and returned free of charge should goods not be cleared. Australia Post will issue a “First Notice” to consumer stating the reason goods may be held and the necessary action to be taken.

B2B the importer is responsible for any additional storage costs whilst waiting for clearance.

Customs Investigations in Australia

Approximately 24 000 parcels each year are intercepted and either destroyed, sent home or filtered with regard to high risk category goods.

Higher risk category of goods include:- Prohibited, restricted and regulated goods including goods of counter-proliferation concern, firearms and weapons, hazardous goods and goods presenting risks to consumer safety, objectionable material and other regulated goods.

Document checking: Electronic reconciliations and checking to screen for closer evaluation.

Physical inspection: according to Customs and Border Protection this occurs regularly to ensure information provided to Customs and Border Protection is correct and to detect prohibited and harmful goods, including illicit drugs and firearms, as well as checking clients are complying with import and export controls and safeguards. Examinations are normally carried out at a Customs and Border Protection licensed premises. Where the nature of the cargo or some other circumstance warrants it, the examination may be carried out at the owner’s premises. In these situations, the cargo remains subject to Customs and Border Protection control. Customs and Border Protection use x-rays, ion scan technology, detector dogs and radiation and chemical warfare agent detectors in the examination process and may also require samples for analysis.

Saturation exercises of whole consignments are also carried out at random as is leverage exercises involving greater numbers of clients.

Targeted audits and desktop verifications are also carried out for B2B suppliers.

Returns

Customs advises consumers “If you have physically received the goods and paid Customs duty on goods imported but they were returned them to the supplier because, “I changed my mind”, “they don’t fit”, or “I don’t like them” then a refund on duty is not available under current legislation. However, as an alternative option if you export the imported goods, subject to certain conditions, you may be entitled to a drawback of the duty paid.”

Considerations and things to look out for

An e- retailer would also need to consider the geographical location of Australia in terms of delivery and distribution times for would be purchasers, as well as significant costs in setting up warehousing and distribution services within Australia should that be a considered option.

Lack of knowledge or experience amongst internal staff of the customs process i.e. in the valuing of good, tariffs, permits, and logistics services can cause delay as well as incomplete paperwork. For goods over $1000 AUD and those businesses wanting to trade larger volumes it is advised to use a licensed broker.

References:

http://customs.gov.au/default.asp

https://www.bitre.gov.au/publications/2014/files/Freightline_01.pdf

http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1415/OnlineShop

 

 

Political and socio-economic environment

Online and mobile usage

Marketing

Payment

Legal framework and regulation

Logistics and fulfilment

References