By: King & Wood Mallesons
How does Australia regulate international trade?
Australia, a signatory to various free trade agreements, strictly regulates international trade, including the importation and exportation of goods and services into and out of Australia.
Note: only in mainland China
Free trade agreements
Free trade agreements aim to promote trade, reduce tariff barriers, simplify customs administration and grant access to government procurement opportunities. Australia is party to a number of significant free trade agreements with various countries including Malaysia, Thailand, Singapore, South Korea, Japan, the United States of America, Chile, New Zealand, China and ASEAN (Association of South East Asian Nations). A full list of agreements and their current status can be found on the Department of Foreign Affairs and Trade website.
The World Trade Organization and other trade agreements
Australia is a member of the World Trade Organization, which administers multilateral trade agreements that may impact on businesses operating in Australia. Other independent agreements also exist. For example, the Australia-European Union bilateral wine agreement governs, among other things, the use of geographical indications between these bodies. Australia is also a member of the Asia-Pacific Economic Cooperation (APEC) which is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region.
There is no requirement for importers to hold an import licence to import goods into Australia. However, the import of certain classes of goods, such as drugs, animal products and weapons, may be prohibited or restricted unless a permit to import is obtained. In certain circumstances, it is also possible to obtain post-importation permissions, licences or other documents.
Import cargo reporting requirements require all air and sea cargo to be declared to the Department of Immigration and Border Protection via a customs entry giving details of all goods being imported, at or before the time the goods arrive in Australia. However, if the customs value of imported goods is A$1,000 or less, only a self-assessed clearance declaration needs to be completed for goods to be released from customs control. From the time of importation until the time of the payment of duty and, in some cases, goods and service tax (GST), goods generally remain under the control of the customs authorities.
Imported goods will normally be subject to GST on importation. In some circumstances, however, eligible importers may register for the Import Deferral Scheme and defer the payment of GST on imported goods.
Services which are “imported” into Australia will generally not be subject to GST unless they are performed through an Australian place of business. However, these types of supplies will be subject to GST where they are provided by overseas suppliers to entities in Australia which are not entitled to full input tax credits (such as banks). In these cases, the GST liability will generally fall on the Australian recipient.
Since 1 July 2017, GST has also be extended to certain cross-border supplies of digital products (e.g. video streaming services) and other services (e.g. architectural or legal services) imported by Australian consumers. GST will apply in these cases even where the supplier does not provide the services through an Australian place of business.
Where goods are not exempt from duty under any concession, an amount of customs (import) duty will generally be payable. In general, a percentage of the customs value of the goods is charged, as assessed based on the total amount paid for the goods, packaged and in export condition, at their place of export.
The point at which the duty is payable depends primarily on the nature of the storage and movement of the goods once imported into Australia. For instance, if certain goods are temporarily stored in a licensed warehouse, the payment of customs duty in relation to the goods can be deferred up until clearance of the goods from the warehouse. Alternatively, the importer can apply for “periodic settlement permission” which allows the importer to move the goods out of the warehouse and defer payment of customs duty until the period specified in the permission.
A range of concessions relating to customs duty may be available in certain circumstances. For example, a Tariff Concession Order (TCO) can be sought. If provided, a TCO means that goods are subject to a lower rate of duty. TCOs may be issued with respect to specific goods where there are no equivalent goods already produced in Australia. A TCO allows duty-free entry of all goods that are identified as consumption goods, and a 3% duty on other eligible goods. The concession is available to all importers of goods which are subject to a TCO and meeting the description set out in the TCO. An intending importer should check if the goods they are importing are the subject of such an order or if an order can be obtained.
The importation of certain goods under a Free Trade Agreement may also be subject to duty concessions. For example, Australia’s Free Trade Agreement with the United States allows goods originating in the US to benefit from a customs duty exemption upon importation into Australia.
Other concessions are available with respect to specific goods (e.g. raw materials, chemicals and certain textiles).
Wine equalisation tax
Certain beverages imported to Australia may be subject to the wine equalisation tax (WET). WET applies to imports of wine, some types of cider, mead and sake where those beverages contain more than 1.15% by volume of ethyl alcohol.
In some circumstances, eligible importers may be exempt from WET.
Luxury car tax
Imports of luxury cars are generally subject to a type of tax known as luxury car tax. Cars with a GST-inclusive luxury car tax value that exceeds the luxury car tax threshold are considered to be luxury cars for this purpose. The threshold for the 2016–17 financial year was A$75,526 (in relation to fuel efficient cars) and A$64,132 (for other vehicles).
Some types of cars are exempt from this tax. This includes (amongst other things) ambulances, motor homes and commercial cars designed for carrying goods whose value exceeds the luxury car tax threshold.
Point of sale: Anti-Dumping Laws
Competition from imports can be considered by the Australian Federal Government to be unfair in certain circumstances. Under the Australian anti-dumping legislation, local industries are entitled to protection where dumped imports, or imports which are subsidised by foreign governments (i.e. a countervailable subsidy), are found to cause or threaten material injury.
Dumping is taken to occur when the export price of products of one country is less than their normal value in the domestic market of the exporter. If these criteria are met, the Government may impose a dumping duty, which in effect is the difference between the export price of the goods and their normal value.
A good is taken to be subsidised for the purposes of countervailing duty in a number of circumstances. This includes where the subsidy favours particular enterprises and where eligibility for the subsidy is not based on objective criteria.
There are few regulations on exports from Australia. Generally, goods to be exported must be declared for export with the Department of Immigration and Border Protection and an authority to deal with the goods must be granted. However, certain goods, such as wildlife, heritage and hazardous materials, may be subject to additional requirements, which may include Federal Government approval, or even total prohibition.
Exports of most goods will be GST-free if they are exported within a specified time of receiving payment or issuing an invoice. Exports of services are also GST-free in many cases, provided that relevant requirements in the GST legislation are met.
Duty is not payable on the export of excisable goods (e.g. alcohol, fuel and tobacco) from licensed premises in Australia. Notwithstanding, specific permission is required from the Australian Tax Office to move such goods from licensed premises in Australia to a place of export where excise duty has not been paid on the production, storage or manufacturing of the goods in Australia. An export declaration is also required from the Department of Immigration and Border Protection to export these goods.
Further information on importing into, and exporting out of, Australia: