Customs duty is levied on individual imports, so it may
seem surprising that there could be end of financial year issues.
However, July 1 2016 is shaping as a busy time for trade
professions with a number of significant changes occurring on top
of the usual list of items keeping customs brokers up at
ATT Programme commences on 1 July 2016
The Australian Trusted Trader (ATT) Programme
moves beyond the pilot phase and opens to all involved in
international trade on 1 July 2016. The AAT Programme offers
participants trade facilitation benefits in exchange for high
levels of self-compliance. The benefits are still being developed,
but the ability to defer customs duty has been confirmed. Other
benefits the programme hopes to deliver are the ability to use free
trade agreements (FTAs) without certificates of origin and moving
from import by import reporting to consolidated reporting.
For those familiar to the programme, recent updates include a
streamlined assessment process with the removal of both
accreditation tiers and interim status plus the use of a less
intensive user friendly self-assessment questionnaire. The bottom
line is that the AAT assessment process was too burdensome and it
is now more streamlined.
Exporters - weighing of containers
It has always been a requirement that shippers correctly declare
the weight of their containers and their contents. It makes sense
as ship loads need to be balanced. To make exporters take this
requirement seriously, the International Maritime Organisation
(IMO) has amended the Safety of Life at Sea convention to prohibit
a ship operator from accepting a container that does not have a
verified gross mass (VGM).
The shipper on the bill of lading will be responsible for
providing the VGM and port terminal operators simply will not load
a non-complying container. The Australian Maritime Safety Authority
(AMSA) will be regulating this area. We have
recently taken part in panel discussions with various AMSA members,
and while the threat of fines has not been strong, it is clear that
compliance is expected.
While fines for non-compliance is an option for AMSA, the real
stick is the commercial impact of goods not being loaded. Exporters
need to be speaking to their forwarders about weighing procedures
required for their goods.
New financial year cost cutting goals - are FTAs the
Cutting costs is still the only realistic option for many
businesses to increase profits. With the low hanging fruit having
already been picked, finding further significant savings will be
difficult. An area unlikely to have been fully explored are cost
savings under FTAs. Many have heard of FTAs in the context of more
competitive exports, but they can also be used to reduce the cost
Duty of 5% is payable on many imports and FTAs can be used to
reduce that duty to zero. With FTAs with China, Japan, Korea, US,
NZ and the ASEAN countries, almost all importers will have the
opportunity to use FTAs to reduce the landed costs of goods. Both
studies and anecdotal experience shows that even mature FTAs (such
as the US FTA) are not heavily utilised.
While there are many consultants looking to mine customs data
for duty refunds, long term and sustainable FTA use will only come
from businesses taking internal ownership of FTAs. Companies
looking to reduce costs through using FTAs need to start with the
question, who in my organisation is responsible for monitoring FTA
Transfer pricing adjustments - don't forget the customs
An issue that has bipartisan support is that legislative and
regulatory action needs to be taken to address profit shifting by
multinationals. This increased focused on multinationals will
primarily have an income tax impact. However, if the response by
multinationals is to increase or decrease the cost of goods sold to
Australian-related parties, there will also be a customs
This impact flows from any adjustment to the cost of goods
altering the customs value of goods, being the value on which
customs duty is calculated. If those goods attract duty, the
outcome is a duty refund opportunity or the obligation to pay
If your transfer pricing adjustments occur at the end of the
Australian financial year, now is the time to consider the customs
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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