If your business regularly exports goods that have first been imported to Australia, you may be eligible to apply for a duty drawback claim. There are a number of criteria that must be met in order to successfully submit a claim, but if eligible, substantial cost savings are possible.
The Australian Border Force (ABF) is the authority that manages duty drawback claims. A duty drawback allows an exporter to submit a claim for a refund of customs duty – specifically, on imported goods that have subsequently been exported from Australia. The goods must also have been unused from the moment of importation, and cannot have been modified into other goods. For example, you cannot submit a claim on bolts of cotton that were processed into face masks once imported into the country, before exporting the masks overseas.
You must also be the legal owner of the goods when they are exported out of Australia. If you are not the legal owne, but you can prove the legal owner has assigned this right to you, you are still eligible to claim. All claims must be submitted within 4 years of date of export – noting that separate timeframes apply to any tobacco products.
If you wish to lodge a duty drawback claim, a range of evidence will need to be gathered to meet the criteria. Your supporting documentation is not required at time of claim submission, but must be available if requested by the ABF and kept for 5 years from date of import. Of note, GST cannot be claimed on a duty drawback, and the amount claimed cannot exceed the import duty paid on the imported goods subject to the duty drawback claim. If you’re a GST-registered importer, you may be eligible for an input tax credit, claimed via your BAS.
Calculating your duty drawback claim is a self-assessed process, and can be done through three methods:
- Per-shipment basis: this is most useful when imports directly correlate to exports.
- Averaging shipment basis: If you deal in high-volume, low-value goods, this method may be useful to produce an average claim that is generally representative of your shipment costs. Care must be taken to avoid over-claiming.
- Imputation basis: this method is used when the exporter and the importer are different, and the exporter does not know how much import duty was paid. The ABF states that “using this method, the import value for the purposes of calculating duty drawback is imputed to be 30 per cent of the purchase price of the goods. This option can only be used where goods are fully imported and have been purchased in Australia by the exporter.”
Submitting a claim, or ongoing claims, for duty drawbacks can be a complex and difficult process. It’s important to ensure you have the correct documentation and valuation methods.
How can Halkin Business Partners help?
Speak to our tax specialists about assistance with preparing duty drawback claims for your business. We can help you to locate and provide the correct documentation, identify where claims are appropriate, and complete the claim valuation process accurately.