import-duty-from-china-to-austrilia

are you wondering about Import Duty From China to Australia?

Are you planning on importing goods or products from China to Australia?

In 2019, the total imports from China to Australia equaled $56.95 Billion! And this number is only increasing with time.

Thanks to global commerce through the internet, now importing from China is far cheaper than manufacturing them yourself. But the thoughts of complex calculations and hefty taxes deter people from going this route.

However, importing from China will give your own business an edge as it will bring down your manufacturing costs to zero.

To attain this huge benefit, all you have to do is learn about the Australian import tax. Then, you can start importing goods without any hassles.

Through this blog, you will learn in detail about duties and taxes levied on imports from China to Australia and much more.

Table of Content

Chapter 1: Must-known Information About Import Duty from China to Australia

Chapter 2: Must-prepare Documentation for Imports Duty from China to Australia

Chapter 3: What is GST Rate? How it Works When Paying Import Duty from China to Australia?

Chapter 4: Ways to Ensure Compliance with Customs Regulations for imports

Chapter 5: FAQs About Import duty from China to Australia

Chapter 1: Must-known Information About Import Duty from China to Australia

There are many retailers and manufacturers in Australia who prefer to import products from China. For this, they use different methods of shipping such as by air, through express, or by sea, to bring these imports into their country.

Import-Duty-from-China-to-Australiaa

Here it is important to note that all items shipped, incur import duty from China to Australia. These are mainly of two types i.e. Customs Duty and GST.

1. Import duties are needed when the total value is more than AUD 1000

In Australia, previously goods below the value of AUD 1,000 were not charged any duties or taxes. However, after the latest legislation on 1st July 2018, products below AUD 1,000 are now subject to a GST charge.

Products above AUD 1000 incur custom duty in addition to the GST. These items include apparel and clothing items, electronic gadgets, and equipment, books, beauty and cosmetic products, and items used in sports.

2. The import duties rate from China to Australia

Numerous products and goods are imported into Australia every year. The amount of duty to be charged on these items is calculated on the basis of their Customs Value.

Usually, the import duty from China to Australia is around 5%. Though it can be anywhere from 0% to 10% at other times.

import-duties-rate-from-China-to-Australia

Example:

To better understand how the Import Customs charge is calculated, let’s assume you have imported a product from China. The item is worth AUD 35,000 according to Customs Value. So, the tax charge will be as follows:

Import Duty Charge = % x Customs Value

Hence, the charge will be equal to the product of 5% x 35000 = AUD 1750

3. What kind of products are forbidden to import from China to Australia?

While buying goods from China, it is vital for every importer to know what products are banned for sale in Australia. Because the Australian Consumer Law is very strict in this area. They have completely prohibited selling some consumer products.

These are:

  • Animals and plants items
  • Asbestos
  • Specific products including ceramic products, cigarette lighters, credit cards, toys, laser pointers, and makeup items.
  • Defense and Strategic goods
  • Drugs and Medicines
  • Goods exported from China during the COVID-19 pandemic
  • Firearms, weapons, imitation weapons, and other potentially hazardous items
  • Intellectual property and cultural goods
  • Random items including rough diamonds, human blood or tissue, ice pipes, kava, wine, pepper spray, pornography, signal blockers, suicide tools and devices, stem cells, and packs of wool.
  • Tobacco and its products

4. How to calculate the import duty from China to Australia?

calculate-the-import-duty-from-China-to-Australia

As already mentioned above, the formula for calculating custom charge is:

Import Duty Charge = % x Customs Value

While the percentage of custom duty is fixed depending on the item, the Custom Value is determined based on a handful of factors. One such main factor is the exchange rate.

The Customs Value of any product imported into Australia is converted into Australian Dollars.

To perform this conversion, Customs & Border Protection uses the exchange rate prevalent at the day the goods are shipped from China. And not the rate of exchange when the goods arrive in Australia.

5. Requirements of Australian Customs for Import duty from China to Australia

For items imported into the country, there are certain rules and regulations that must be followed.

For instance, the owner of the goods (the importer or the person who controls the goods) must lodge an Import Declaration called the Self-Assessed Clearance (SAC) declaration for goods valued under AUD 1,000. In most cases, your freight forwarder will do this on your behalf.

This is lodged electronically via Australia’s Customs & Border Protection through their Integrated Cargo System.

For imports valued over AUD 1,000, an import declaration must be lodged. When you make the import declaration, you also have to pay an additional Import Processing Charge (IPC).

This is based on the Customs Value of the item imported. The IPC charge is calculated as follows:

  • Goods valued below AUD 1000, there is no IPC charge.
  • Goods valued between AUD 1000 to AUD 10,000, the charge is AUD 50 for electronic declaration and AUD 90 for manual declaration.
  • Goods valued over the amount of AUD 10,000, the charge will be AUD 152 for electronically and AUD 192 for manually lodged deceleration.

Customs-for-Import-duty-from-China-to-Australia

6. What labels are needed for import duty from China to Australia?

Before importing any products from China into Australia, it is vital to check whether the labeling on the product packaging is compliant with local requirements. There are some specific labeling requirements set out to be followed, these include:

  • AS/NZS Labeling Requirements – entailing to specific product standards
  • Ingredients labeling for cosmetics and other relevant items
  • Country of Origin – for imported products such as food items that don’t need a Trade Description
  • RCM Mark
  • Care Labelling – for clothing and textiles

7. The Product Safety Standard in Australia (AS/NZS safety standards)

Any imports that come into Australia must be compliant with the Australian/New Zealand Standard (AS/NZS standards).

The standards are developed by Standards Australia, these standards cover various aspects of a product including its safety, testing, and quality of performance.

Most of these standards are safety-related. An example of this would be the imports of boats which come under the Trade Practices Regulations of 2014. All manufacturers, as well as importers of the product, must adhere to the guidelines of AS/NZS 3004.2:2014.

Now, Standards Australia allows the public benefit of access to AS/NZS for free, and it plans to provide non-commercial public access available by the end of 2023.

8. Refund of Import duty from China to Australia

Refund-of-Import-duty-from-China-to-Australia

Sometimes, under special circumstances, an importer can be issued a refund. The Australian Border Force may give you a refund for one of the following custom duty or taxes:

  • Full Import Declaration (FID)
  • SAC Declaration
  • GST/ Return
  • Who can receive a refund of customs duty?

In accordance with the Customs Regulation of 2015, you may receive a refund if you fulfill all of the following criteria:

  • You are the actual owner of the imported goods or an authorized agent acting on behalf of the owner.
  • You have lodged the original version of the FID, SAC, or return.
  • You have paid the customs duty and assessed indirect tax at the time of entry into home consumption.
  • Who is not eligible for a refund?

There are two circumstances where you are not eligible for a refund.

In the first case, if you have already claimed the amount on your Business Activity Statement, you can’t receive a refund of GST, as per the Tax System Act of 1999.

Secondly, you can’t receive a refund if you have already claimed it before on the same import goods.

  • How to claim your customs duty refund?

To claim your refund on import duty from China to Australia, you will have to make some changes in your import declaration that you lodged to import goods. This can be in the form of FID, SAC, or a return.

The best way to go about this is to hire a customs broker to help you amend the original documents. These will then be submitted to the ABF either electronically through the ICS or manually.

  • Other information

If you plan to submit a claim for a refund, there are some things that you must know before you go ahead:

  • Only the actual owner of the imported goods is entitled to a refund. So, if you are the importer but not the legal owner, your application for a refund will be rejected.
  • Refund claims have to be submitted within 14 days of being cleared by customs.
  • You will need a copy of the invoice, relevant shipping documents, and other supporting documentation to file for a refund.

Chapter 2: Must-prepare Documentation for Imports Duty from China to Australia

Documentation-for-Imports-Duty-from-China-to-Australia

To get the import process started, your supplier in China must submit some important documents to your freight forwarder. These will include:

  • A packing list with details on the contents of each box
  • Certificate of Origin
  • A bill of lading mentioning the type, number, and the final destination of goods
  • A Commercial Invoice with details about the value of the goods being exported from China

1. Does the import duty from China to Australia need a license or permit?

Most of the products imported from China don’t require any kind of licenses or permits. However, some equipment, chemicals, and livestock, etc. are an exception to the rule.

To find out whether your import goods need a license or permit, check out the Biosecurity database  of the Australian Government for more information.

2. Certificate of Origin for Import duty from China to Australia

Out of all the documents needed for importing goods, the Certificate of Origin is of the utmost importance. This document is issued by the Government, stating the name of the country or region in which the goods were purchased or manufactured.

In international trade, some countries may get preference over others. This means that the import duty on products from such countries is either reduced or completely called off.

certificate-of-Origin-for-Import-duty-from-China-to-Australia

Australia also has some countries on its list that it prefers to trade with. So, to make use of such incentives you will certainly need to obtain a Certificate of Origin as it will bring down your import duties as well as the total cost.

To give you an idea, these are the details you will need to attach with your Certificate of Origin:

  • Name of the importer
  • Name of supplier/exporter
  • Method and route of transportation
  • Description of goods
  • Quantity

3. Bill of Lading for Import duty from China to Australia

Bill of Lading or Airway Bill is a legal document that is of high importance, just as the Certificate of Origin.

It is raised by your freight forwarder and attests to the fact that the shipping company has received the items for import. This document state important information such as:

  • Name of Shipper
  • Name of the Importer
  • Incoterm
  • Product type
  • Vessel Number
  • Discharge Port
  • Place of delivery
  • Containers Number
  • Description of the item
  • Net weight and Dimensions

4. Commercial Invoice for Import duty from China to Australia

commercial-Invoice-for-Import-duty-from-China-to-Australia

The Commercial Invoice, of items shipped into Australia, mentions the Custom Value. This value is handy in calculating all the import duty from China to Australia.

It also works as a checklist for your freight forwarder when they are importing on your behalf. This document states the following information:

  • Name of the importer/consignee
  • Description of the item
  • HS code of the product
  • Quantity
  • Unit per value
  • Total value of the items
  • Packing List

Chapter 3: What is GST Rate? How it Works When Paying Import Duty from China to Australia?

Once your imports are cleared by customs, the importer now becomes liable to pay your GST. You may choose to handle this yourself.

But to avoid any hassle, it is better to let your freight forwarder take the issue from your hands. And know about GST rates is important for you to avoid being scammed.

1. What is the GST and how to calculate it?

GST is short for Goods and Service Tax. Aside from custom duty, importers are also required to pay the GST on products they import to Australia.

This tax is payable at the rate of 10% on the value of the taxable imports.

GST-Rate-duty-from-china-toaustrilia

2. What are the components of GST?

The 10% GST charged on the total of these four components:

  • Customs Value as per the ABF
  • Customs Duty (this may range from 0% – 10% of the customs value)
  • Shipping charges to Australia (paid/payable)
  • Insurance on shipping (paid/payable)

So, if an import has a Customs Value of AUD 20,000, Customs Duty charge equals AUD 1,000 at 5% of Customs Value. Shipping and Insurance charges equaling AUD 1,200 and AUD 30 respectively. Then the GST would be calculated as:

GST = 10% x (20,000 + 1,000 + 1,200 + 30) = AUD 2,223

  • Customs Value (CVAL)

The Custom Value or CVAL is actually the cost of the product being imported into China. This is based on the Free On Board (FOB) price, which is the cost of goods including the shipping charges for transporting goods.

Customs-Value-CVAL

The Customs Value is consists of:

  • Price per unit of the item
  • Total cost of the product
  • Cost of transportation to the Loading Port (Included in FOB)
  • Cost of Export Clearance (Included in FOB)
  • Paid services
  • Additional Costs (including tool costs, molds, and paid product samples)
  • Customs Duty

As stated above the Customs Duty is calculated based on the imported item’s Custom Value (usually the FOB price). This duty can be from 0% to 10% depending on the product. However, it is at 5% for most imports.

To find out the amount of Customs Duty, simply multiply the Customs Value of a product by its relevant percentage of Custom charge.

Here you can check how To find out the complete list of products and the Customs Duty associated with them.

  • Shipping & Insurance

The GST calculation includes the cost of shipping and insurance (both paid and payable), this is the cost for sending products and goods from China to the destination of consignment in Australia.

Shipping-Insurance

The place of the consignment can be the port where the items are shipped to either by sea or by air. Or it can be the address of the place in Australia where the goods have to be delivered, in case of importing goods by mail.

3. GST exemptions

There are certain items that are exempt from GST, because they are covered by some Custom duty concession.

These items can be money, certain food and beverages, and some medical aids and appliances. So, when importing these goods, you don’t have to pay any GST charges.

4. Deferring GST payments

If you are registered for GST as an individual, then you have the option to defer your GST payments. To do this, you will have to take part in the Deferred GST Scheme.

Deferring-GST-payments

Under this scheme, following the importation of goods into Australia, you can defer the GST on imported goods until the first business activity statement is lodged. To be eligible for this scheme you must meet the following criteria:

  • You must possess an ABN
  • Person must be registered for GST
  • The activity statements should be lodged monthly online
  • Make electronic payments for activity statement

5. How to reduce the GST charge without getting in trouble?

The only way to reduce GST legally is to bring down the total import value of the goods being transported from China.

This would mean lowering the number of goods per order, negotiating with the Chinese supplier to get a better price, or opting for shipment by sea instead of by air.

There are some other ways that can also lower the GST charge, such as when the importer requests the manufacturer to falsely quote a lower price on the legal documents. However, this is an illegal practice and it will result in hefty fines for both parties.

Chapter 4: Ways to Ensure Compliance with Customs Regulations for imports

Ways-to-Ensure-Compliance-with-Customs-Regulations-for-imports

When you invest money in buying from a foreign country, it is always worthwhile to be mindful of all requirements for importation. So, let’s check out the most important factors every importer must know about importing products from China to Australia.

1. Properly label products with trade descriptions before dispatch

According to the Commerce Act 1905 and the Commerce Regulation 2016, some goods are required to have proper trade descriptions without which they can’t be imported into Australia.

For China’s products, Australia has the following trade description requirements that are mandatory:

  • The description must be In English and in legible characters
  • The country of origin has to be mentioned
  • State a true description of the goods
  • The trade description should be presented as a principal label or brand, placed in a prominent position

2. Be careful while importing prohibited items

importing-prohibited-items

While importing from China is a brilliant idea, some products are under restrictions and others are completely prohibited for the purpose of importing.

It’s highly important that you investigate whether the product you plan to import is legal or not. As importing illegal goods can lead to huge fines, penalties, and even imprisonment.

So, before you import your product from China, ensure it is not on the list of ABF’s prohibited items.

3. Get a certificate of origin for import duty from China to Australia

Thanks to agreements between China and Australia, importers can now receive benefits when they buy from Chinese suppliers.

But to make use of these benefits, you must have a Certificate of Origin as a import duty from China to Australia that details the origin of products you are importing.

Visit the ABF website to find out more about the China and Australia international trade agreement.

4. Get your Australian Business Number for Import Duty from China to Australia

Australian Business Number or ABN is an 11 digit long number allotted to businesses for tax purposes. Using this number you can register with the tax authorities to get the following benefits:

  • Your customers and suppliers can identify your business while sending an invoice or ordering goods.
  • Bypass pay as you go tax
  • Claim GST credits on your imports
  • Access to an Australian domain name

5. Make timely customs declarations for Import Duty from China to Australia

import-from-china-to-australiaaa

Custom Declaration is necessary if you want Customs to clear your goods as a import duty from China to Australia. These are of three types: SAC, import declaration, and warehouse declaration.

For goods under the threshold of AUD 1,000, SAC declaration is the right option. However, for goods over the value of AUD 1,000, an import declaration has to be lodged. This can be done either electronically through the ICS or manually by mail.

Lastly, when the importer wishes to store their goods in the Customs warehouse instead of clearing them, the warehouse declaration need to be made for import duty from China to Australia.

6. Comply with health and safety standards for imports

As an importer, you must remember to abide by all laws and regulations. Australia has some very strict health and safety standards for certain goods imported from China such as textile items and electronics.

Ignoring these standards can lead to some serious circumstances for your business and will cost you hefty fines. Therefore, don’t take any risks. And check whether your imported products meet the safety criteria set by the Australian Government.

Chapter 5: FAQs About Import duty from China to Australia

faqs

1. What is the GST for importing duty from China to Australia?

GST is a tax levied on products imported from China to Australia. The owner of the goods is liable to pay the tax as soon as the goods are released by customs.

The rate of GST charges for imports in Australia is 10%.

2. How do you calculate import duty from China to Australia on goods and products?

In order to calculate the import duty on a product, you will need to know two things. The percentage of duty that applies to the particular product and the Customs Value of your imported product. The percentage of Customs charge can range anywhere from 0% to 10%.

When you have this information, just plug it into this simple formula to calculate the import duties, taxes, and charges from China to Australia.

Import Duty Charge = % x Customs Value

3. What is the threshold for import duty from China to Australia?

The threshold for custom duty in Australia is AUD 1,000. Any goods below this value don’t incur custom duties or taxes. However, goods over this amount are subject to import duty from China to Australia.

4. Are there any exemptions for import duty from China to Australia?

Yes, there are some concessions and exemptions available to importers in Australia. Following the Free Trade Agreement with China in 2015, international trade was made easier between the two countries.

Because of this, the rate of duty on many products has been effectively brought down to 0%.

You can Check here the full list of GST-free goods.

5. How to reduce the import duty from China to Australia legally?

Import duty is charged at 5% of the Customs Value. So, the only legal method that you can use to lower your import duty is to decrease the Customs Value of your import.

The breakdown of Customs Value is made up of:

  • Price per unit of the item
  • Total cost of the product
  • Cost of transportation to the Loading Port (Included in FOB)
  • Cost of Export Clearance (Included in FOB)
  • Paid services
  • Additional Costs (including tool costs, molds, and paid product samples)

To bring down the total amount, each element has to be reduced in cost.

Conclusion

Importing goods from China can really help to streamline your business in your home country. But before you jump into it, it’s best to know what import duties and taxes your product of choice will incur, so you are not caught by surprise later.

EJET provides you extensive information on what import duty from China to Australia is levied on products. Using our guide will make understanding taxes and duties much easier for you. So, you can import from China to Australia with confidence.