Unleash Cash Flow Benefits with Deferred GST for Your Australian Import Business

Importing goods into Australia can be a fantastic way to expand your business offerings and reach new customers. However, navigating the customs clearance process can sometimes can be confusing, especially when it comes to upfront costs like Goods and Services Tax (GST). This is where the Deferred GST scheme comes in – a game-changer for businesses looking to improve their cash flow and streamline import procedures.

Deferred GST

What is Deferred GST?

The Australian Taxation Office (ATO) offers a Deferred Goods and Services Tax (DGST) scheme that lets eligible businesses put off paying GST on imported goods. Instead, they can pay it when they lodge their next Business Activity Statement (BAS). Traditionally, Australian importers need to pay GST at the time their goods arrive at the border. This can be a major advantage, especially for businesses that import frequently or deal with expensive goods.

Do I Need to Pay GST on Imported Goods?

Yes, generally speaking, GST applies to most imported goods brought into Australia. In most cases, the government charges a GST rate of 10% to most importers. However, this rate can fluctuate depending on the specific good being imported. So, the Deferred GST scheme offers a way to postpone this payment, giving your business a cash flow boost.

Is GST on Imports Refundable?

No, GST on imported goods is not directly refundable. However, under the Deferred GST scheme, the delayed GST payment can be potentially offset by input tax credits claimed on your BAS. This essentially reduces the overall GST you ultimately pay.

Deferring GST vs. Avoiding GST

Deferred GST doesn’t eliminate your GST obligation. You’ll still need to pay it, but on a more manageable timeline.

How to Apply

Open laptop with the application form on the screen

Applying for the Deferred GST scheme is a straightforward process. The Australian Taxation Office (ATO) provides an online application form that you can complete. However, there are some eligibility requirements you’ll need to meet. We’ll delve into those details in a moment.

The Example of Deferred GST

Imagine you’re a Brisbane-based retailer importing a shipment of clothing valued at $10,000. At a 10% GST rate, the upfront GST payment would be $1,000. With Deferred GST, you could clear customs without paying this upfront cost. This allows you to receive your goods quicker, sell them to generate revenue, and then settle the GST liability with your next BAS lodgement. This frees up valuable cash flow that you can use for other business purposes, such as marketing your new product line or restocking inventory.

Benefits of Deferred GST

  • Improved cash flow: Frees up cash for other business needs until your BAS lodgement.
  • Faster customs clearance: Upfront GST payment can speed up the release of goods.
  • Simplified accounts payable: Reduces the need for separate GST payments at import time.

What is the GST Deferral Scheme?

The terms “Deferred GST” and “GST Deferral Scheme” are interchangeable. They both refer to the same program that allows businesses to delay GST payments on imported goods.

Am I eligible for DGST?

To be eligible for the Deferred GST scheme, your business must meet the following criteria:

  • Registered for GST: Your business must be registered for GST in Australia.
  • Monthly BAS Lodgement: You must lodge BAS statements on a monthly basis and electronically.
  • Good Compliance History: You cannot have any outstanding ATO debts or penalties.
  • Electronic Transactions: Your business must be able to communicate electronically with both the ATO and Australian Border Force (ABF). This is often facilitated by a professional freight forwarder.
  • Valid Australian Business Number (ABN): You must possess a valid ABN.

Expert Opinion on the Importance of a Professional Partner:

“The Deferred GST scheme offers significant cash flow advantages for Australian importers,” says Scott Darmenia, Director at GenFreight. “However, navigating the application process and ensuring seamless customs clearance with Deferred GST can be challenging. Partnering with a reputable freight forwarder with expertise in Deferred GST and customs regulations streamlines the entire import process, saving you time, money, and unnecessary headaches.”

GenFreight’s experienced customs brokers can guide you through the Deferred GST application process, handle all electronic communication with the ATO and ABF, and ensure your import shipment complies with all regulations. Undoubtedly, this allows you to focus on running your business while professionals takes care of the import logistics.

Here are some additional benefits to consider:

  • Reduced Administration: Deferring GST can simplify your accounts payable process, as you won’t need to handle separate GST payments at the time of import.
  • Improved Cash Flow Management: With more breathing room on GST payments, you can better manage your cash flow and allocate funds for other business priorities.
  • Faster Customs Clearance: If you avoid the initial GST payment, customs will likely release your goods quicker, expediting your time to market.

Important Considerations

australian dollars with GST inscription
  • Record Keeping: It’s crucial to maintain accurate records of your imported goods and the associated deferred GST liability. This will ensure smooth processing during BAS lodgement.
  • BAS Lodgement Obligations: Remember, even though the GST payment is deferred, you are still responsible for lodging your BAS statements on time and accurately reporting the deferred GST amounts.

Seeking Professional Help

While the information above provides a good starting point, navigating the complexities of import regulations and the DGST scheme can be overwhelming. This is where partnering with a professional freight forwarder like GenFreight can be invaluable.

Benefits of Using a Local Freight Forwarder:

  • Expertise and Guidance: Firstly, the experienced team can guide you through the entire import process, including Deferred GST application, customs clearance procedures, and ensuring compliance with all regulations.
  • Streamlined Operations: Secondly, by handling the logistics and paperwork, forwarding agent frees you up to focus on running your business.
  • Reduced Risk of Delays: Thirdly, Freight Forwarding agent’s expertise can help avoid costly delays or penalties associated with non-compliance.
  • Cost-Effectiveness: Lastly, while there are fees associated with using a freight forwarder, their services can often save you money in the long run by ensuring efficient and compliant import processes.

In Conclusion

The Deferred GST scheme is a valuable tool for Australian import businesses looking to improve cash flow and streamline customs clearance. By understanding the scheme’ and its eligibility criteria, you can determine if it’s the right fit for your import operations. Remember, importers still need to pay some upfront costs, even though Deferred GST helps with cash flow. These costs include customs duties and other import charges.

Get in Touch with GenFreight Today!

Contact GenFreight‘s import specialists today to discuss your specific import needs and explore how the Deferred GST scheme can benefit your business. They can answer your questions, guide you through the application process, and ensure a smooth and efficient import experience.

Disclaimer: This article is for informational purposes only. Don’t take it as professional financial or tax advice.