The primary enforcement agency with respect to cross border trade is the Australian Customs and Border Protection Service (Customs).
As a member of the World Trade Organization (WTO), Australia uses the valuation methods provided for in Article VII of the General Agreement on Tariffs and Trade 1994. Where there is a contract of sale for the importation of goods into Australia, the transaction value method is the primary basis for the appraisement of imported goods for customs purposes.
Australia is also a member of the World Customs Organization (WCO) and uses the Harmonized System for the tariff classification of its imports and exports.
The general rate of customs duty in Australia is five percent; however, certain articles of textiles and clothing attract duty rates of 10 percent. Some products are either duty free in their own right, by way of tariff concessions, or as a result of one of Australia's Bilateral or Multilateral Trade Agreements.
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Duties are assessed in Australia on the value of the goods when packed into a container for export to Australia (roughly on a Free on Board (FOB) or Ex-works (EXW) price).
The primary mode of customs valuation in Australia is the transaction value method. Any doubts cast by Customs on the transaction value may lead to the use of other valuation methodologies under the WTO appraisement hierarchy.
Excise-equivalent duties apply to importation of certain commodities such as alcohol, tobacco products and fuel. The excise tax rates vary from product to product.
Australia also imposes a Luxury Car Tax of 33 percent on vehicles with a value in excess of $57,466 or $75,375 for fuel efficient vehicles (value limits noted are for the 2010-2011 year).
A 10 percent Goods & Services Tax (GST) is imposed at the time of import. The GST is levied on the sum of the customs value + overseas freight & insurance + customs duty x 10 percent.
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A number of commodities require import and/or export permits from certain government agencies prior to their importation into, or exportation from Australia. Examples of these are chemicals, certain foods and medicines, animal products, plant products, arms and ammunitions, motor vehicles, used machinery and "dual-use goods".
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Import declarations are required to be lodged with Customs for all consignments with a customs value exceeding $1,000 and for all excise-equivalent goods, regardless of whether the imported articles are subject to duties or not.
A customs broker generally undertakes the import declaration preparation, lodgement and payment process through the Customs electronic Integrated Cargo System (ICS).
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Transfer pricing is the subject of increased attention by Customs. A formal policy on the treatment of related party transactions and the effect of the relationship on the transfer price of the goods has been published by Customs.
Customs continues to focus on royalties and license fees, as well as the inclusion in the customs value of the value of assists (inputs to manufacture) provided to the manufacturer at a reduced cost or on a free of charge basis.
Satisfying rules of origin under an FTA continues to be a risk particularly where there is no requirement for a certificate of origin.
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The Australian customs legislation allows for voluntary disclosure of erroneous declarations and payment of short paid duty and GST without penalty action provided the disclosure is made prior to a Customs audit or investigation of the relevant import declarations.
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Subject to certain conditions, and in accordance with the numerous international treaties to which Australia is a signatory, a number of items may be imported free of duty. For example, exhibit pieces, demonstration units, and articles for repair to be re-exported thereafter. Articles previously exported from Australia that have not undergone any processing overseas may also be imported free of duty, subject to certain conditions.
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Duties paid on imported materials used in the production of an exported product may be reclaimed by way of a customs duty drawback subject to certain conditions. Additionally, drawback may be claimed for goods imported into Australia that are subsequently exported without being used in Australia.
Customs bonded warehouses are available as a means of deferring the payment of import duty. Australia also has a scheme to defer duty on imported goods when it is known that the goods will be subsequently exported. This is known as the Tradex Scheme.
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Australia is signatory to a large number of bilateral and multilateral trade agreements. These include agreements with New Zealand, the United States, Singapore, Thailand, Chile, South Pacific countries, Papua New Guinea, Canada and the ASEAN countries (not currently in force for Indonesia), as well as WTO Agreements to provide free or reduced rates of duty to least developed and developing countries. Australia is also in varying phases of negotiation for trade agreements with China, Japan, Korea, Malaysia and the Gulf Co-operation Council.
In order to qualify for preferential duty rates, the rules of origin for the particular agreement must be satisfied. These rules have varied criteria (e.g. regional value content, or change in tariff classification) which apply differently to products under different FTAs.
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Projects in the mining, resource processing, food processing, food packing, manufacturing, agriculture, gas, water and electricity supply industries are eligible for duty concessions on imported capital equipment for projects where certain criteria are met.
There are also a number of other investment schemes and concessions available relevant to the automotive and textile, clothing and footwear industries.
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