Trying to calculate the right amount of customs duty that needs to be paid can be a tricky challenge. Whilst you want to make sure you pay the correct sum of tax you also don’t want to hand over more money than you need to.
Talk to a Melbourne customs broker, for instance, and they will tell you that it can take years of experience to fully understand all of the rules and regulations and how to apply them correctly for an accurate duty calculation.
Australia, like most countries around the globe, have a system where most goods that are imported have certain duties and taxes applied to them on entry.
Let’s take a look at how to make an accurate calculation of the duties you will have to pay. What circumstances trigger a potential overpayment of duties. Plus, a look at how to claim back money that you overpaid customs duties.
Table of Contents
Making an Accurate Calculation of How Much you Have to Pay
In an ideal world, you will be able to work out exactly how much you need to pay for your imported goods so that you don’t end up making an overpayment.
However, the fact that it is down to you to self-assess the correct tariff classification of the goods you are importing into the country means there is always the possibility that you will make an error that leads to an incorrect calculation.
With regard to Australia, for example, each tariff can be found within the Customs Tariff Act 1995 guide. After making your selection, you will then have to consider the correct Harmonised System (HS) code for your imported goods.
In general terms, a typical way to work out the exact amount of duty payable is to work out what 5% of the FOB (Free On Board) price is. You will then have to add 10% of the CIF (Cost, Insurance, Freight) to the duty value.
Unless you are a customs broker who is used to making classification selections and duty calculations on a daily basis you can easily see how easy it is to fall foul of a system that is more complicated than it seems.
What Could Trigger an Overpayment?
As well as simply making an incorrect calculation you could also find that a host of different circumstances contrive to make your numbers all wrong.
There are many different scenarios where you could overpay duty. These include a failure to hold the correct free trade certificate when importing your goods, and if the price of the goods was subject to a rebate that had not been taken into account.
It would be sensible to develop a relationship with a customs broker who can help you to navigate your way around all of the rules and regulations relating to import duties.
Getting a Refund
If you discover that you have overpaid customs duty you can apply for a refund by making an application to the Australian Border Force.
Again, an experienced freight broker will be able to fill in the paperwork and lodge your application so that you get your request dealt with expediently and receive a refund as quickly as possible.
You don’t want to get your calculations wrong when importing goods. It can be costly in all sorts of ways. Talk to a customs broker if you want to cut through the red tape and get your numbers right the first time of asking.
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