Customs clearance is often a task left to specialists, but it is useful for logistics personnel to have an overview of some of the challenges and pitfalls. This white paper outlines a number of areas of Australian customs regulations and practice which are useful for anyone involved in import or export to know.
It is not a substitute for specialist professional advice tailored to your circumstances.
Overview of Australia Customs
The Australian Border Force (ABF) is a part of the Department of Home Affairs. The ABF is responsible for offshore and onshore border control enforcement, investigations, compliance and detention operations in Australia. Its mission is to protect Australia's border and manage the movement of people and goods across it.
Customs also supports other government agencies by ensuring the correct application of their regulations. These include:
- The Home Affairs Department, which has the responsibility for implementing the government’s foreign trade policy.
- The Department of Agriculture and Water resources, which has the responsibility for Australia’s Biosecurity and Quarantine. DAWR is the regulatory authority for imports of Animal, Plant and Agriculture related products.
- The Australian Bureau of Statistics
- The Therapeutic Goods Administration. The TGA is the regulatory body for therapeutic goods in Australia. It is a division of the Australian Department of Health established under ther Therapeutic Goods Act 1989.
Australian import requirements
Depending on the type and value of the goods or products there may be customs duty, goods and services tax (GST) and other taxes liable for payment.
Some goods may carry special restrictions or may even be prohibited from being imported. For example, if goods contain industrial chemicals like cosmetics, solvents, adhesives, plastics, inks, printing and photocopying chemicals, paints, household cleaning products and toiletries, the importer will need to register with the Australian Government's National Industrial Chemicals Notification and Assessment Scheme (NICNAS) and pay registration fees.
If importing plant, animal, mineral or human products, the Department of Agriculture and Water Resources may need to inspect and/or treat the products for pests or diseases or the goods may require an Import Permit.
Finding out about quarantine regulations is a must when importing goods. If the goods are subject to quarantine regulations, it is necessary to apply for an import permit prior to arrival and allow time for quarantine after arrival.
Import Permits must be valid prior to the arrival of the goods in Australia. If goods arrive prior to an Import Permit being approved, the goods will be re-exported.
Tariff classification of goods
Goods imported into Australia require classification under the Customs Tariff Act 1995.
Importers need to self-assess the correct tariff classification of goods they import. The classification of goods for import and export purposes has always been a challenge for businesses and is a crucial part of customs processing. This is because they not only determine the tariff or duty rate, but also the end use of the product.
Australian Border Force is a member of the World Customs Organization (WCO) and follows the Harmonized System Nomenclature (HSN), a goods nomenclature developed and maintained by the WCO and governed by an international convention.
Goods are classified by ‘product families’ under an 8 digit code.
The eight-digit code shows the HSN at eight-digit level under the name "Tariff Item".
- The first two digits of the code provide the chapter number,
- The next two digits give the Customs Tariff Head (CTH) grouping.
- The third set of two digits in the code gives the Customs Tariff Sub-heading.
- The resulting six-digit code is aligned with the Harmonized System of Nomenclature adopted by the World Customs Organization.
The last two digits indicate the Customs Tariff sub-head for the classification.
Some commodities are restricted and prohibited for import into Australia. The importer must verify the Prohibited Imports list of restricted and prohibited items prior to importation.
Remember: penalties may apply for incorrect or misleading information.
Customs Valuation Regulations (CVR)
Customs Assessed Value or Customs Value means the value of goods for the purposes of levying Duties & Taxes.
Cost of Goods + Insurance + Freight & other charges incurred up to the consignment made available at customs location is the assessable value of the consignment.
Based on the Incoterms given, if the actual value is unavailable, the supplier invoice value is considered and the other factors indicated in the below table below are added according to the standard defined by Customs.
* If no Insurance premium receipt is provided, customs calculates it as 0.25% of FOB value.
||Value on commercial invoice
||Origin inland handling charges
|| Freight Charges
|| Insurance Premium*
Note: Cost and Insurance and Cost and Freight are non-standard terms which are used in Australia. C&F is equivalent to CFR.
It is essential that valuations given for customs purposes are real and genuine. Article VII of the 1994 General Agreement on Tariffs and Trade (GATT) lays down the main principles of customs valuation. Be aware that the customs value should not be arbitrary, fictitious or based on the value of indigenous goods.
- It should be real and based on the actual value of goods under import, or of similar goods.
- It should also derive from a sale or offer of sale in the ordinary course of business under fully competitive conditions.
- If the actual value is not ascertainable, the customs value should be based on the nearest ascertainable equivalent of such value.
The agreement on customs valuation contains provisions to implement these principles. If Australian Border Force suspects that the declaration of value is not correct, there can be delays in obtaining customs clearance, not to mention heavy penalties for misdeclaration.
The basis of customs value should be the transaction value. However, Australia follows WTO regulations which provide six methods of valuation:
- Transaction Value Method;
- Comparative Value Method based on Transaction Value of identical goods;
- Comparative Value Method based on Transaction Value of similar goods;
- Deductive Value Methods based on subsequent sale price in the importing country;
- Computed Value Method based on cost
of materials, fabrication and profit in the country of production;
- Fallback Method based on previous methods with greater flexibility.
A method may only be applied if the previous method or methods in the list cannot be applied. They are thus listed in order of priority. For example, method 1 must be applied unless it cannot be. Then method 2 must be considered and so on. It is not permitted to simply select a preferred method among the six.
Any goods which are supplied free of charge, such as commercial samples, should still have their value shown on the invoice but with the additional mention “Value declared for customs purpose only”.
Repaired and returned goods need a complete set of documents when exported from Australia for repairs. The Assessable Value for return would be cost of repair + cost of freight in both directions. Even if the repair is free of charge for the importer, the cost of repair must still be declared for duty purposes.
It is important to be aware of the checks and investigations which may be carried out by the ABF. It is specialised in investigating transactions where there is a relationship between the supplier and the importer, and certain other special features such as “Technical Collaboration” between the parties.
ABF examines the influence of any relationship on the invoice value of the imported goods in respect of transactions between the related parties. This is in order to determine whether the existence of any such relationship or agreement has influenced the invoice value of the imports.
Note that "person" also includes legal entities. Persons who are associated with the business of one another in that one is the sole agent, sole distributor or sole concessionaire of the other (however described) are deemed to be related for the purpose of these rules if they fall within the criteria of this sub-rule.
For the purpose of the valuation rules, persons shall be deemed to be "related" only if:-
- They are officers or directors of one another's businesses
- They are legally recognised partners in business
- They are employer and employee
- Any person directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them
- One of them directly or indirectly controls the other vi) Both of them are directly or indirectly controlled by a third person vii) Together they directly or indirectly control a third person viii) They are members of the same family
- BL and or AWB
- Commercial invoices relating to the sale transaction
- Packing lists
- Packing Declaration required for all sea freight shipments
- Depending on type of goods: manufacturers' declarations may be required
- Certificates of Origin may be required for certain countries
Import Permits may be required for some goods. Examples below:
- ARPANSA Radioactive,
- TGA, (Therapuetic Goods Administration)
- FORS Vehicle Import Approvals
- DAFF Import permits including Second Hand Machinery
- other general Import Permit types which allow certain otherwise prohibited imports to be admitted into Australia
In Australia, in many instances, ATA Carnet is the best way of managing temporary imports.
The main categories of goods temporarily imported under cover of ATA Carnets are the following:
Antiques, machinery, machine-tools, catering equipment, canned food, footwear, toys, computers, office equipment, transformers, electric generators, electrical/ electronic and scientific equipment, surgical and dental equipment, jewellery and articles of precious metal/stones, "hi-fi", audio-visual, photographic and filming equipment, lasers, musical instruments and records, display material, aircraft, films, motor vehicles and accessories, racing engine machinery, heating and lighting equipment, agricultural machinery, furniture, crockery, paintings and other works of art, umbrellas, race-horses, suitcases, perfume, theatrical effects and sets, concert and musical instruments, leather and sports goods, clothing, yachts and boats, display stands.
Free Trade Agreements, Preferential Tariff Agreements, Comprehensive Economic Cooperation Agreement
Australia has signed agreements with the countries and country groupings below. Imports into Australia from these countries entitle the importer to special duty reductions and exemptions.
Free Trade Agreements
- New Zealand (ANZCERTA or CER)
- Developing Countries
- Least Developed Countries (LDC)
- Singapore (SAFTA)
- Thailand (TAFTA)
- Chile (ACI-FTA)
- Korea (KAFTA)
- Japan (JAEPA)
- China (CHAFTA)
- United States (AUSFTA)
- Malaysia (MAFTA)
ASEAN covering the following countries:
FTA’s concluded but not yet in force:
Comprehensive and Progressive Agreement for Trans Pacific Partnership (TPP-11) covers the following countries:
- Brunei Darussalam
- New Zealand
- Peru (PAFTA)
Pacific Agreement on Closer Economic Relations (PACER) covers the following countries:
- New Zealand
- Cook Islands, Kiribati, Nauru, Niue, Samoa, Solomon Islands, Tonga, Tuvalu
FTAs under negotiation:
- Australia-Gulf Cooperation Council (GCC) Free Trade Agreement
- Australia-Hong Kong Free Trade Agreement
- Australia-India Comprehensive Economic Partnership Agreement
- Environmental Goods Agreement
- Indonesia-Australia Comprehensive Economic Partnership Agreement
- Pacific Alliance Free Trade Agreemwent
- Regional Comprehensive Economic Partnership
- Trade in Services Agreement
Prospective FTA negotiations
- Australia-European Union Free Trade Agreement
- Australia-United Kingdom Free Trade Agreement
The Australian customs concepts outlined in this white paper are of necessity generic and brief and are intended to highlight areas you may not be aware of in order to prompt further investigation and professional advice. Australian Border Force compliance can be a major challenge for multinational businesses and understanding Australia’s Foreign Trade Policy is crucial for all stakeholders, including exporters and importers. That said, the Australian customs authorities’ steps to ease the bureaucratic burdens for doing business continue to help improve the processes as well as overall transparency.
The greatest impediment for a freight forwarder is insufficient documentation supplied from origin by the consigner. Providing the correct paperwork will generally ease the risk of impediments and delays.