Taxes on Importing from China to Australia

Taxes on Importing from China to Australia

Buying Items from China in Australia

If you own an Australian-based business, you surely want to expand your national appeal. Unfortunately, it could be quite expensive to manufacture in Australia, particularly if you will do it on your own. Custom design, specialized tooling, prototyping, and so much more can get quite expensive. On top of that, it can be very risky if you don’t have any idea about the market for your goods.

In most cases, a more plausible solution is to import inexpensive and unusual products from somewhere else. This way, you will not spend large amounts of cash at once, and you will be able to test your market before you put it in full swing. Being the main international manufacturer of affordable goods, China is the most obvious option when sourcing new products.

If you will import goods from China to Australia, however, you have to remember that there are import duty and taxes that are due. The method of valuation is Free on Board or FOB, which means that the import duty you will pay is calculated exclusively based on the imported goods’ value. Aside from duty, imports are also subjected to other charges and taxes like Customs Service Fee and sales tax.

The Process of Importing to Australia from China

Here are the things you should do if you like to import to Australia from China:

  1. Understand the types of goods you can import and conduct a market research.
  2. Explore different online marketplaces of suppliers and manufacturers for sourcing goods.
  3. Practice due diligence with your chosen supplier and prepare a contract.
  4. Arrange for logistics and shipping to Australia from China.
  5. Understand the different tariffs, licenses, and regulations you need.
  6. Upon arrival of goods in Australia, pay the necessary tariffs, duty, and other fees.
  7. Market your goods in Australia.

Duty Rates

In Australia, the duty rates can range from 0 to 10 percent, with 4.6 percent being the average duty rate. There are goods not subjected to duty like laptops and other types of electronic items.

Sales Tax

Sales tax applies to majority of imported goods with several exemptions. The primary exemptions are for specific food products, medical aids, as well as imports qualified for duty concessions. Sales tax is applied at 10 percent of VoTI or value of the taxable importation, which is the sum of any duty payable, customs value, cost of insurance and freight, and any Wine Equalization Tax, if it is applicable.

Minimum Thresholds

The imports with FOB value, or the product value that excludes insurance and shipping cost, amounting to AU$ 1000 will be exempt from Import Processing Charge, sales tax, and duty.

Other Customs Fees and Taxes

  • Import processing charge – This is applicable on imports wherein the value of the goods is higher than AU$1,000. This amount will depend on the type of import declaration and mode of entry.
  • Luxury car tax – This is 33 percent level on some motor vehicles with value more than the specific threshold.
  • Wine equalization tax – This is 29 percent levy on wines and other types of alcoholic beverages.