Understanding your GST obligations is essential if you are an exporter or importer of Australian goods.You may face penalties and fines if you are importing or exporting goods without ensuring they are 100% compliant.
Businesses end up making certain errors that cost their business a hefty some of money. Consult bookkeeping and accounting services in Sydney or Melbourne to stay on top of your financial obligations. It’s essential to have reliable business advisory services to guide you through the complexities of international trade.
Don’t let common GST mistakes derail your import or export activities—partner with us to ensure your goods and services are properly taxed and compliant. Here is a list of common mistakes people make when importing or exporting goods and services, with some tips on avoiding them:
1. Not Knowing Your Customer
One of the most common mistakes made by people new to importing and exporting goods and services is not knowing their customers.
It is important you understand what a consumer versus business is in terms of how they use your product or service. Consumers buy items on their behalf, while businesses purchase goods or services for their commercial operations (for example, an office supply store).
What information do I need from my customers? You must collect all relevant details, including:
- contact details (including address)
- ABN (Australian Business Number) or ARN (Australian Registered Name) if applicable
- Copy of photo identification, such as driver’s license or passport
This will help avoid fraud but also give peace of mind when dealing with someone else online where there may have been no face-to-face interaction between parties before making purchases/sales together!
2. Failing To Register For GST
You must register for GST if you make an annual turnover of over $75,000, otherwise, you will be fined up to $10,000 and may be charged with tax evasion.
Furthermore, if there is no record of your business activity in Australia’s taxation system (GST), it can get difficult to issue any kind of invoice or receipt that can be used as proof of purchase for our customers overseas.
3. Getting The Classification Wrong
This is a big one. Getting the classification wrong can be a costly mistake, as you may have to pay GST on goods that are not taxable or vice versa.
You’ll need to know what your goods are classified under to apply GST correctly. Here are some steps you can take:
- Check with your supplier or manufacturer (if they’re Australian).
- Look up similar products on the Australian Customs and Border Protection Service website. They may give examples of how other similar products were classified by Customs officers at the border when imported into Australia.
4. Not Applying The Right Rate Of GST
GST is a value-added tax. This means you pay GST on the value of goods and services you buy and then claim back the GST you’ve paid when you sell them.
The rate of GST that applies to a particular transaction depends on where it takes place (the location), what type of good or service is being provided (the nature), and who provides it (the supplier).
There are four rates: 0%, 5%, 12%, and 15%. Each has rules about which goods or services qualify for which rate.
5. Not Charging GST On Imported Goods
An important thing you need to know is that importing goods without charging GST is a serious offense. The goods are still subject to GST if you buy them from an overseas supplier, so don’t think you can simply avoid paying it by not charging it. You can only claim a refund of GST if you export the goods yourself and use them for your business or personal use outside Australia (or sell them to someone who does).
In addition, if the imported services are unrelated to your business activities, they should be charged with GST as well.
6. Making Mistakes With Refunds And Adjustments
GST is a self-assessed tax. That means you are responsible for calculating and paying the correct amount of GST on all your transactions, including imports and exports. You must also keep proper records of these transactions to prove your calculations if asked by the Australian Tax Office (ATO).
The ATO has developed an online tool called “GST Online” that allows businesses with turnover under $1 million per year to lodge their quarterly returns electronically through the website or mobile app. It’s important to note that this does not apply to businesses importing goods into Australia; only those with sales over $75,000 annually can use this service!
Get in touch with Ace Biz.
Ace Biz understands importing and exporting goods and services can be daunting. That’s where they help you avoid the common mistakes that can lead to fines or legal action.
Their team of experts can offer advice on everything from bookkeeping, accounting, tax, payroll, small business advisory, and self-managed super fund setup.
You can get all your questions answered with one simple phone call or email, so call us today!