Indirect Tax - Brokers
General information about the effect of the new tax system on importing and exporting goods is available elsewhere on this web site. This page provides detailed information about a range of indrect tax issues.
The issues are grouped in the following categories:
- Australian Business Number
- Amending errors
- Calculating GST on imports
- Deferral of GST
- GST Exemptions (Non-taxable Importations)
- Luxury Car Tax Exemptions
- Reference material
- Taxable Importations
- Taxable Supplies
- Transport and Insurance
- Wine Equalisation Tax Exemptions
All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise specified.
Australian Business Number
I have a legal name and a trading name. Which name is used by Customs when my ABN is linked to my COS owner code?
The registration process for the Australian Business Number includes provision for the legal name and one or more trading names. Trading names are used for a number of reasons including the separate identification of GST Branches.
Entities with GST Branches are allocated a single ABN with a separate identifier for each Branch. These identifiers are known as Client Activity Codes (CAC's).
Customs uses the legal name in all instances. Trading names are ignored. GST Branches are identified by the legal name of the parent, with each branch using the parent's ABN and a separate CAC.
Can overseas businesses register for GST?
Yes, overseas businesses are required to be registered for GST if the annual turnover of their supplies connected with Australia is $50,000 or more. If the annual turnover of their supplies connected with Australia is less than $50,000 the overseas business may register for GST.
Are Internet downloads taxable importations?
No, because there has not been an importation of goods. [Section 13-5]
The downloading of something is a taxable supply if the supply is connected with Australia, there is consideration, the enterprise test is met and the supplier is registered or required to be registered. It is connected with Australia if the supplier makes the supply through an enterprise that they carry on in Australia. [Section 9-25(5)(b)]
The downloading of something where the supply is not connected with Australia may still be a taxable supply in some circumstances. The circumstances are:
- the recipient of the supply acquires the thing supplied solely or partly for the purpose of an enterprise that the recipient carries on in Australia; and
- the recipient is registered or required to be registered; and
- the supply is for consideration; and
- the thing is going to be used solely or partly for making input taxed supplies or for a private or domestic purpose.
In these circumstances, the GST is payable by the recipient. This is known as "reverse charging"[Division 84].
For related questions on importing goods containing intellectual property (eg computer software, videotape, etc) see How is the GST calculated.
If there are goods missing ex warehouse, is GST payable on the missing goods?
Where Customs duty is demanded in accordance with s.35A or s.149 of the Customs Act, GST is payable [Item 16(b) s.114-5].
Can an importation be both a taxable supply and a taxable importation?
Yes. Generally, a taxable importation is distinguishable from a taxable supply but some supplies are both a taxable supply and a taxable importation. This is the outcome of subsection 9-25(3) that provides that a supply of goods is connected with Australia if the supplier imports the goods.
In these cases, the supplier/importer is required to pay GST to Customs on the taxable importation of the goods and needs to be registered for GST in order to claim any input tax credit to which they are entitled.
Do I need a Tax Invoice from Customs and Border Protection in order to claim an input tax credit for my creditable importation?
No. The GST Act requires suppliers to issue tax invoices for taxable supplies that they make. Customs and Border Protection is not making a taxable supply to an importer. Tax invoices are not required for taxable importations imported by air, sea or post.
When an importer makes a taxable importation, they are required to pay GST to Customs and Border Protection (or, if approved to do so, defer the GST to their next monthly Business Activity Statement). Customs and Border Protection provides the importer with documentation in relation to that payment or deferral (eg an import declaration advice, an authority to deal, a self-assessed clearance declaration, a return, an EFT receipt, a Parcels Post Assessment card, etc). That documentation can be used by that importer (as evidence that the GST was paid or deferred) when claiming an input tax credit.
How can the overseas supplier obtain an input tax credit for the GST paid to Customs?
All imports are, generally speaking, taxable importations on which the importer is liable to pay GST to Customs. For some transactions, the importer is the overseas supplier. If the importation is a creditable importation the importer/supplier is entitled to claim an input tax credit for the GST paid to Customs. That entity needs to be registered in order to claim this input tax credit. Many overseas suppliers do not wish to register and have sought other options. One option is provided by GST Act Division 57 (resident agents) but this does not suit all suppliers.
Division 57 of the GST Act allows non-residents to make a resident agent responsible for the GST consequences of what the non-resident does through the resident agent.
Another alternative is provided by Division 83 to the GST Act which allows the recipient to agree to assume the supplier's GST responsibilities for the taxable supply (reverse charging). This option does not, however, affect the supplier's liability for the GST payable on the taxable importation.
A fourth alternative is that the recipient assumes the supplier's GST responsibilities for the taxable importation. The recipient would also be responsible for
- entry of the goods for home consumption
- retention of commercial documents in accordance with Customs Act s240
- payment of underpaid duty, if any, pursuant to Customs Act s165
- payment of administrative penalty, if any, pursuant to Customs Act s243T
Calculating GST on imports
Calculating GST - Exchange rates
What rate of exchange is to be used to arrive at the value of the taxable importation (VoTI)?
The rate of exchange used to arrive at the customs value of goods is the exchange rate at the date of export of the goods to Australia. The same valuation date is to be used to convert the other elements of the VoTI, including the international transport and insurance. [GST Act subsection 13-20(2A)]
Calculating GST - Establishing the customs value for certain goods
How is the value of the taxable importation (VoTI) established if there is no import transaction (eg a person imports goods that they have owned for some time)?
The value of the taxable importation is still established using the usual formula (customs value plus transport and insurance plus customs duty plus wine equalisation tax). The customs value (one of the elements of that formula) cannot be established using the transaction value method. The Customs Act requires an alternative method to be used to establish the customs value. The alternative methods are:
- identical goods method
- similar goods method
- deductive (contemporary sales) method
- deductive (later sales) method
- deductive (derived goods sales) method
- computed value method
- fall-back method
How is the GST calculated on imported carrying media bearing software (eg computer disks) or other intellectual property (eg videotape, film, music recordings)?
The value of the software (intellectual property) is included in the customs value and, therefore, in the value of the taxable importation. Further information is provided in Australian Customs Notice 2000/51.
How does one deduce the Customs Value from a GST-inclusive price?
A GST-inclusive price contains valuation elements that are not included in customs value (see Customs Act, Division 2 of Part VIII). The GST element needs to be deducted in deducing the customs value.
The amount of GST element included in the price depends on a number of factors, such as:
- whether the overseas supplier is registered for GST
- whether the supply of the goods is GST-free
- whether the importation of the goods is a non-taxable importation
How is the value of the taxable importation calculated for Nature 30s?
For each line on a Nature 30 entry for home consumption ex warehouse, the value of the taxable importation (VoTI) is established as follows:
- the customs value = Quantity x Warehouse Unit Value (WUV) from the relevant Nature 20 line
- the transport and insurance = Quantity x Transport and Insurance Unit Value (TIUV) from the relevant Nature 20 line
- the duty is calculated as normal
- the wine tax, if any, is calculated as normal
Sales in bond do not affect the VoTI on a subsequent Nature 30. The VoTI always derives from the Nature 20 WUV and TIUV data regardless of any intervening sales in bond.
Where goods are moved under bond, the Single Transaction Permission or Continuing Permission documentation must contain all the information required for the subsequent Nature 30 including the WUV and TIUV data. Warehouse proprietors must not accept delivery of under bond goods where this information is not provided.
How is GST calculated on imported yachts?
The amount of GST payable to Customs on the importation of a yacht is 10% of the Value of the Taxable Importation (VoTI). The VoTI is the sum of:
- The customs value of the yacht;
- The amount paid or payable for the international transport of the yacht to the place of consignment in Australia and to insure the yacht for that transport; and
- Any customs duty payable on the yacht.
The customs duty payable is currently set at 5% of the customs value.
How is customs value established for a yacht?
The Transaction Value method is normally used to value yachts. This means that the customs value is based on the price actually paid or payable for the vessel. The transaction value is determined irrespective of any market fluctuations after the date when the contract was concluded.
In cases where the Transaction Value method cannot be used (eg there has not been a sale of the yacht), recourse will be had to an alternative valuation method (eg Identical Goods method, Similar Goods method). This valuation may be based on the advice of an independent Marine Surveyor as to the landed duty and tax paid value of the imported vessel having regard to its age and condition. This value will include elements for freight to Australia, customs duty and taxes. Appropriate deductions may be made in order to exclude these elements from the customs value.
How are international transport and insurance costs established for yachts that arrive in Australia under their own power?
Customs Information Centres can provide advice on determining an appropriate value for transport and insurance in cases where the yacht has travelled to Australia under its own power.
Where a yacht has visited more than one overseas port en route to Australia, the legal place of export will need to be determined. It is the importer's responsibility to provide sufficient reliable information to clearly prove from which country the vessel was exported to Australia. Where this evidence is not available, Customs will determine the place of export to be the final port of call in the last country visited prior to the vessel arriving in Australia and determine any allowance for overseas freight accordingly.
Calculating GST - Customs Duty
Is dumping duty included in the value of the taxable importation (VoTI) by virtue of it being a duty of Customs.
Yes. Section 8(2) of the Customs Tariff (Anti-Dumping) Act 1975 provides that dumping duty is a special duty of customs. Therefore it is part of the VoTI.
What about interim dumping duty?
Yes, the security deposit for the interim dumping duty must include the GST.
If interim dumping duty is included in the value of the taxable importation and it is subsequently found that dumping duty is not necessary, this will mean that too much GST has been paid on the taxable importation. How can the importer obtain a refund of this overpaid GST?
Where GST has been included in the deposit and subsequently the dumping duty is determined not to apply, the deposit including the GST is refunded.
Calculating GST - Transport and Insurance
NOTE: Customs has issued Australian Customs Notice 2000/35 titled "International Transport and Insurance and the Value of Taxable Importations".
Is the international transport and insurance of imported goods GST-free?
No. The supply of this international transport is GST-free but the costs of that transport and insurance are included in the value of the taxable importation. In other words, the supplier of the transport and insurance will not need to remit GST to the Australian Taxation Office, but the importer of the goods will pay GST on these costs to Customs when they import the goods. [Item 5, section 38-355]
Many bills of lading show freight as "As Arranged". The Shipping Company will not provide a Customs Broker with the actual cost. How can the Broker establish the correct amount for the customs entry?
The GST Act imposes compliance responsibilities on importers and their brokers. Brokers need to discuss with their clients the need to obtain accurate information about transport and insurance. New procedures may be required in some circumstances to ensure that the information is available to brokers at the time the entry is compiled.
Often the "port or airport of final destination as shown on the transportation document" is incorrect and the goods are actually delivered elsewhere. How does this affect the amount of transport and insurance included in the value of the taxable importation?
The amount of international transport paid or payable to the port or airport of final destination as shown on the amending transport documentation should be used in the value of the taxable importation. If an entry has already been lodged with incorrect values for transport and insurance, or incorrect "port or airport of final destination" then a PWA would need to be lodged.
Where the importer buys the international transport from a freight forwarder who subcontracts that transport to a third party, which amount is included in the value of the taxable importation? Is it the amount paid by the importer to the freight forwarder or the amount paid by the freight forwarder to the third party?
The value of the taxable importation includes the amount paid or payable by the person making the taxable importation (the importer). An amount paid by a service-provider to a third party is not relevant.
What happens if the transport and/or insurance is paid by the importer's sponsor?
The amount of transport/insurance was still "payable" by the importer; the fact that another entity actually paid this debt on the importer's behalf does not alter the fact that the amount is included in the value of the taxable importation.
What amount should be used on the customs entry for insurance if the goods are uninsured?
What amount should be used on the customs entry for transport if there is no charge for that transport? (eg An airline imports printed advertising brochures on its own aircraft.)
Nil. (If, however, the airline's Operations Branch charges the Marketing Branch for the transport of the brochures, the amount paid or payable must be included in the Value of the Taxable Importation.)
Do passengers have to include transport costs in the Value of the Taxable Importation (VoTI) when they pay GST on goods imported in excess of their passenger concession?
If a person travels overseas (including holiday, business etc) and they bring back personal goods outside of their concession or commercial goods and they have not been required to pay a separate amount for the transport of those goods, the amount paid or payable for international transport is determined to be zero. Any separate amount paid should be included.
With self-transported goods, what amount should be used on the customs entry for transport? (eg An airline imports an aircraft for use on Australian domestic flights. The airline pays the costs of transporting the aircraft to Australia, including the purchase of fuel and the wages of crew used on the flight.)
The costs incurred in transporting the vehicle to Australia must be included in the Value of the Taxable Importation.
We are invoiced monthly for the transport costs associated with a range of importations. The goods are usually already entered for home consumption. Can we pay GST on the customs value plus the duty and subsequently pay the GST on the actual transport costs (by way of an adjustment of the Business Activity Statement)?
No. The GST Act requires the GST to be calculated on the customs entry on the full value of the taxable importation. [Sections 13-20 and 33-15]
If an overseas supplier transports the goods to another country for further processing before forwarding the finished goods to Australia, which transport and insurance costs need to be included in the value of the taxable importation?
The value of the taxable importation is represented by the customs value of the goods plus the duty plus the amount paid or payable for the international transport and insurance plus wine tax (if applicable). It is likely in this situation that the transport costs to the other country are incorporated in the cost of the goods and therefore would form part of the customs value.
In the method of calculating the VoTI there is a reference to the "amount paid or payable". Which applies?
There are not two amounts to choose from. The difference is one of timing, not amount. If an amount has been paid, that is the amount to be used. Otherwise, the amount payable is to be used.
An Australian Customs Notice allows a general insurance rate of 0.25% to be used. Can this be used for GST?
Yes, in certain circumstances (see ACN 2000/35).
How is the amount paid or payable for marine insurance determined when the importer has an Open Marine Insurance policy?
If the actual amount of the insurance premium is known, that amount should be used. If it is possible to apportion the insurance over the total annual importations, that method can be used. ACN 2000/35 provides further guidance.
How is the amount paid or payable for the international transport and insurance of a consignment of goods apportioned between different lines of goods included in the consignment?
The GST Act does not prescribe a method of apportionment in these circumstances. Note that the method of apportionment will not affect the amount of GST payable on the total consignment unless it contains both taxable and non-taxable lines of goods.
Customs COMPILE system is programmed to apportion the transport and insurance across all lines in proportion to customs value (see Australian Customs Notice 2000/35). There is provision to override this method of apportionment if the importer can provide more accurate data. For example, international transport may be more appropriately apportioned by weight or volume; international insurance may be more appropriately apportioned in accordance with insurance risk levels.
The COMPILE override is achieved by manually apportioning the transport and insurance across all lines and providing a calculated amount in the TILV* field on each customs entry line. COMPILE will carry out an edit check to ensure that the total of all TILV line amounts equals the total transport and insurance amount for the complete entry. The value of the taxable importation will be calculated by COMPILE for each line on the basis of the manual TILV amount included on that line.
* TILV = Transport and Insurance Line Value
Note: Customs has issued Australian Customs Notice 2000/35 titled "International Transport and Insurance and the Value of Taxable Importations". Please click here for more information.
Further information on this matter can be found in Australian Customs Notice 1989/116 and Australian Customs Notice 1990/71.
Importers can lodge a Post Warrant Amendment (PWA) entry to correct an earlier entry.
Where a PWA results in a refund, a refund application fee of $45 is normally payable. This fee is not payable if the refund is for GST only (ie customs duty is not refunded).
NOTE: Refunds of overpaid indirect taxes can only be paid if the Commissioner is notified of the overpayment within 4 years after the time of importation.
Click here for PWA Instructions January 2001 which incorporates PWA COMPILE enhancements available to Users from 27 January 2001.
Click here for Appendices to PWA Instructions January 2001. Please note this spreadsheet contains eight worksheets which need to be printed out separately.
Is a supply of goods in bond a taxable supply?
Yes. The sale of imported goods in bond is a taxable supply. All four criteria for a taxable supply (GST Act s9-5) are met. In particular, the supply is connected with Australia pursuant to subsection 9-25(1) of the GST Act ("A supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply"). The goods are made available to the purchaser by the supplier. The purchaser can take delivery of the goods once they have entered the goods for home consumption ex warehouse and obtained an authority to deal from Customs.
For the same reasons, supplies of excisable goods in bond are also taxable supplies. The intention of the GST Act is apparent in Division 108 ("Valuation of taxable supplies of goods in bond").
The supplier, as with any taxable supply, will need to charge GST on taxable supplies in bond and remit this GST to the ATO. [Note: There are special valuation rules for excisable goods sold in bond to unregistered recipients - see GST Act Division 108.] The recipient of the supply may be entitled to an input tax credit for the GST included in the price they pay to the supplier. That recipient will need to clear the goods from the bonded warehouse. They can do this a number of ways, including:
- entry for home consumption ex warehouse [For imported goods (Nature 30 entry) this is a taxable importation and GST is payable to Customs. The owner may be entitled to an input tax credit. For excisable goods (Nature 40) this is not a taxable importation and, therefore, no GST is payable]
- export the goods
- move the goods under bond to another Customs warehouse.
How can I get more information?
Click here for further information.