Understanding GST and Import Taxes for Importing from China to Australia

Your business can benefit from importing items from China into Australia. Many Australian companies turn to Chinese suppliers for various products.

The reason is simple! Chinese suppliers offer many benefits to help companies grow in the Australian market.

But you must understand the rules, taxes, and shipping service options. In this guide, we will help you understand the sourcing process. 

Understanding Import Regulations in Australia

Australian Border Force (ABF) handles importation into Australia. They ensure that imported goods meet Australian standards and pay the correct taxes. 

There are several requirements for importing from China into Australia. Below are two significant laws you need to pay attention to.

1) Australian Business Number

An Australian Business Number is a number given to businesses based in Australia. Before you can bring your products into the country, get this number. 

It’s like an ID card for your business. There are no charges to get it, and the application process is entirely online. An ABN helps the government know who’s bringing goods into the country. It also helps your business become legally registered and recognized.

2) China-Australia Free Trade Agreement

ChAFTA, as the full name suggests, aims to reduce importation costs. On regular occasions, when you bring goods into a country, you have extra costs called tariffs. 

The China-Australia free trade agreement makes these tariffs smaller. It can also completely rid many Chinese products of them.  That will make it cheaper for you to import from China to Australia.

Importance of Tax Compliance When Importing from China to Australia

Different taxes come into play when you import from China to Australia. It’s good to know which taxes apply to your product.

1) Customs Duty

You need to understand how to calculate your customs duty. It is calculated based on the type of goods and their origin. 

Not all items have the same customs duty. Two things affect the customs duty on imported goods: the type of item and the origin of the item.

We have explained this point in our post on importing clothing and textiles from China. They have one fixed rate when importing clothes, fabrics, and blankets. However, food is at a different rate, and so are cars. 

The government has an extensive list of all the different rates for each product. Check out government importation websites to determine what taxes you’ll pay for your items.

2) The 10% GST Rule for Imports

Goods and Services Tax (GST) is 10% on most imported goods. GST exempts some foods and medical products from falling under the rule.

Key Shipping Options to Import from China to Australia – Air vs. Sea Freight

You must choose the correct shipping method when importing from China to Australia. The two main options include air and sea freight, which we will discuss below.

1) Air Freight

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Air Freight is fast when you import from China to Australia. It typically takes 3-8 days for your goods to arrive in Australia. 

However, the high speed increases the pricing, too. Air Freight is the most expensive method compared to others. 

To pick a better option, you must identify your products’ value and volume. Moreover, if you need them quickly, air freight is best.

2) Sea Freight

It is slower, typically taking 20-40 days. However, Sea Freight is cost-effective and is mainly used for large shipments. If you have bulky goods, then it is ideal.

You must choose a suitable method based on your shipment’s specifications. Size, speed, and your budget will matter in this case. 

Because of this, the urgency of your delivery and its size will be the decision maker. Your overall capital budget is also essential. Thus, ensure you have all your facts straight before choosing an option.

Steps to Calculate Import Taxes and Duties

It is essential to calculate import taxes when sourcing from China to Australia. The duty amount depends on your product’s HS code and origin, i.e., China. So, you must find out the HS code of the products. 

You should add 10% GST to the total import costs. For this, take the value of your goods, add the duty, and then add 10% more for GST. 

It might seem like many steps, but doing this with care can help you pay the right amount.

Here is an example calculation:

Suppose you imported electronics goods worth AUD 10,000. Then, you may have to pay the taxes and duties below.

1) Import Duty

It is generally 0-5% for electronics. So, 5% of AUD 10,000 = AUD 500

2) Goods and Services Tax

• 10% of the total (customs value + duty + insurance + freight) 
• The freight and insurance costs can be AUD 1000.
• 10% of 11500 = AUD 1150
• Thus, the approximate total taxes and duties become import duty + GST.
•  500 + 1150  = AUD 1650

This calculation may be more complex depending on the goods and trade deals. Get everything accurate before doing your calculations.

We have explained simple methods to calculate it in our post import tariffs from China to the US.

Tips to Ensure a Smooth Import from China to Australia

You must partner with three players who can make your import process smooth. They are;

• Sourcing agents
• Customs brokers
• Freight forwarders

A reliable sourcing agent can help you find China factory in South of China. Besides, an agent can do many other tasks.

However, each partner handles a different role and offers various benefits for your business. Thus, you must have information before choosing who to use for imports. 

Extra Costs to Look Out For When Importing from China to Australia

There can be several extra expenses that can make new importers worried. Knowing these additional costs can help you budget more accurately.

1) Storage Fees at Ports or Airports

Sometimes, your goods must stay at the airport or port for a while. It may happen when there is a delay in customs or if paperwork is needed while checking your items. 

When that happens, you may have to pay for storage time. It’s basically like paying for the rent of where your goods are kept during the checkups.

2) Customs Inspection Charges

The government might want to look at your goods to ensure they’re safe and allowed in Australia. If they do this, you have to pay for it. It’s like paying for a security check at the airport but for your goods.

3) Fumigation Fees for Certain Goods

Some products, like plants or wooden items, might need special cleaning. It ensures they don’t bring in bugs or diseases. This cleaning costs money.

These fees may not be incurred when importing accessories and jewelry from China.

4) Currency Exchange Rate Fluctuations

You usually pay in Chinese money (yuan) when you buy things from China. However, the price of Chinese money compared to Australian dollars can change daily. You might end up paying more or less than you thought.

5) Bank Fees for International Transfers

Sending money to your Chinese supplier might incur some bank charges. It’s basically paying a transaction fee for international transfers. Check with your bank first. Call them and look at the prices to send money to different countries.

Read More:

• Buying Product Samples from China: Your Ultimate Guide
• How to Import Battery from China: A Complete Guide
• How to Import Shoes From China: Fashion Footwear Guide
• How To Import Bags From China: A Detailed Guide

Final Thoughts!

Now, you can import from China to Australia hassle-free. It needs careful planning and a better understanding of tax duties. 

Remember, successful importing is all about more than finding the cheapest supplier. You can let a China sourcing service take the troubles out of your sourcing process.

OwlSourcing specializes in making imports from China to Australia smooth and straightforward. Our team understands Australian import laws. It will ensure your goods arrive safely in Australia without any surprise costs.