Import Duty and GST Explained for Australian Businesses

Every imported product is classified under an HS tariff code, and the applicable duty rate (commonly 0% or 5% for general cargo, though it varies) is set against that classification, not against the product category in plain language. Two similar-looking products can attract different duty rates depending on their exact composition or use.

Australia's free trade agreements with China, ASEAN countries, and others can reduce or eliminate duty on qualifying goods, provided you can supply a valid certificate of origin. It's worth checking whether your product qualifies before assuming the standard rate applies.

Import GST is generally calculated on the 'value of the taxable importation', which is the customs value of the goods plus international transport and insurance costs plus any duty payable, so GST is charged on a base that already includes duty, not on the product price alone.

Businesses registered for GST can typically claim this back as a credit on their next Business Activity Statement, and many use the ATO's deferred GST scheme to defer payment until the BAS is lodged, improving cash flow rather than paying GST upfront at the border.

Under-declaring the customs value, or leaving out freight and insurance costs from the declared value, can trigger penalties even if unintentional. So can misclassifying a product to try to attract a lower duty rate.

Total landed cost should always be modelled including duty, GST, freight, insurance and clearance/brokerage fees, not just the unit price from the supplier, before you commit to a purchase order.