In relation to revenue related claims, the following are the areas that will be given careful attention by the ABF:
- non-declaration of goods
- false claims for GST exemption
- improper use of free trade agreements and concessions
- incorrect claims for duty refund.
Importantly, the ABF has made clear that the focus will be trade that does not involve a Trusted Trader (Australia's AEO program). Where a trusted trader is not involved the ABF treats the trade as posing an unknown risk. As the number of trusted traders increases, the group of non-accredited traders becomes smaller and more likely to be the subject of regular ABF attention.
ABF focus areas – key considerations
Misclassification – General duty rates are either 0 or 5% in Australia, so classification may not seem as important as for other higher duty countries. However, in Australia classification can determine whether a particular tariff concession will apply or whether the ABF considers the goods are subject to dumping duties. We have seen many cases where compliance action has centred around whether a product is a basic good and subject to dumping duties, or has been further worked and should be identified as a something more than the good described in the dumping notice.
Incorrect classification can also impact of the use of free trade agreements.
Undervaluation – With low duty rates valuation issues do not have the same level of attention in Australia as in other jurisdiction. Areas to watch out for include whether the customs value includes any commissions paid to overseas agents, royalties paid to import the good or the value of materials provided to the manufacturer free of charge.
Non-declaration of goods – Deliberate smuggling of goods can result in significant fines. With low duty rates, there really should be little motivation to adopt this tactic. Always be cautious if a supplier wishes to produce a customs invoice or packing list that does not reflect the commercial transaction.
False claims for GST exemption – GST only has a real impact on importers that cannot claim a corresponding credit. This will mainly be domestic consumers. Businesses aggressively claiming a GST concession on imported goods need to question why they are taking the risk.
From 1 July 2018 this issue will become more important as currently exempt low value goods (below $1,000) will become subject to GST.
Improper use of FTAs – This is an area that will continue to grow as more Australian trade is potentially eligible for lower duty rates under FTAs. It is important to check that an origin document meets the strict requirements of the FTA. Classification inconsistencies should not be ignored, but rather, resolved upfront with the ABF. Also pay attention to situations where one origin document is used for multiple shipments or deliveries to multiple ports.
Incorrect claims for duty refunds – Nothing seems to invite an audit like lodging an application for a duty refund. Refund applications should be treated as seriously as claiming a concession at the time of import. You should not 'test' eligibility for a concession by lodging a refund and seeing if it is automatically processed.
No doubt new issues will arise in 2018, but as a starting point, we recommend focusing your compliance program on the areas the ABF has identified as important.
Hunt & Hunt has a specialist Customs and Global Trade team with over 20 years' experience in customs compliance matters. Please contact us if you have any concerns as to whether the import or export of your goods comply with Australian law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.