Last week the Federal Government handed down a budget that carried the tagline “fairness, opportunity and security”. While the focus of the budget was far from customs and trade, there were a number of measures announced that will impact importers, exporters, (along with freight forwarders and customs brokers).
Customs and trade highlights announced were:
- There will be a continued focus on the taxation of multinationals. This will mean greater review of transfer pricing arrangements which includes related party transactions such as the price paid for goods and royalties for use of intellectual property. Audits of such arrangements can have a negative income tax outcome, but can also result in customs duty refunds.
- The Government is optimistic about concluding FTAs in 2017/18. Allowance has been made for concluding FTAs with the Gulf Cooperation Council, India, Indonesia, Hong Kong and the Regional Comprehensive Economic Partnership (RCEP) (China, India, Korea, Japan, ASEAN, Australia, New Zealand)..
- In an early win, tariffs on pesticides and herbicides from Indonesia are expected to fall in the next financial year reducing duty on these items by $1.2 million. This measure is in return for Indonesia dropping tariffs on Australian sugar to 5%.
- The news for the proposed EU FTA is not as good with revenue from duty on motor vehicle imports expected to rise by 2020/21. This outcome would not be consistent with an EU FTA being put in place prior to this time.
- Customs and excise duty receipts are budgeted to grow by 3.5% in 2017/18. The rise is based on excise equivalent duty increases. Non-excise equivalent duty is expected to fall by approximately 25% as the impact of free trade agreements is felt.
- There will be an extension of the current customs duty exemption available to motor vehicle producers for the importation of prototype motor vehicles and components to automotive service providers.
- The costs of running the Department of Immigration and Border Protection is expected to fall by about $100 million a year over the next 4 years.
- While not a measure in this year’s budget, it is important to remember that at the mid-year budget update it was announced that penalty units will increase from $180 to $210 from 1 July 2017. This change will bring about a 15% increase in the cost of infringement notices.
What did you think of the budget?
Source: Hunt and Hunt Lawyers via FTA (Freight and Trade Alliance)
