The Customs Compliance Areas for you and your Customs broker

2018 Compliance for every importer and Customs Broker 

The Australian Border Force (ABF) has released an industry alert to almost every customs broker, freight industry representatives and agent. This notice serves as to what the areas will be the focus of its compliance activities. The best guide as to the ABF’s compliance activities may be its annual statistics. This details error detection and the issuing of infringement notices.

ABF statics for the year 2016 – 2017 show which areas will warrant infringement notices. Level of compliance activity was ramped up in 2016/17. Compared to 2015/16 that’s is a vast increase of their target. Looking at 2016 ,customs offences were tallied at almost $5 million to penalise industry depo’s. Compared to the 2015/16 amount of only $1.9 million.

The number of notices issued as well – 584 in 2016/17 to 266 in 2015/16. Every importer / exporter and customs broker must start take precautionary steps to ensure they are reporting accurately.

 

Level of compliance in running a Licensed Depot 

We all know a licensed depot is a approved location that goods can be moved to for a short period of time. This is prior to it being cleared for customs purpose. The ABF are now looking into the level of compliance shown by depot licensees.

A depot licensee is a position of trust given that goods are permitted to be moved to the depot. This is despite not being securely assessed or the subject of a duty payment made. Non-compliance by a depot operator can lead to prohibited goods entering Australia. Even the  underpayment of duty.  A Freight consultant or Customs broker can co-ordinate the under bond through the use of ICS.

In respect of a breach of a depot licence, the ABF issued about 69 infringement notices. This saw an increased level of threats to cancel or suspend depot licenses.  Correlating with this was an increase in the level of infringement notices. These notices were for offences relating to the movement of goods under customs control. This can relate to unauthorised stoppages during an under-bond movement between 2 locations. But this was also for goods or cargo being permitted to leave a depot or licensed warehouse prior to the goods being customs cleared and duty paid.

ABF can very easily detect this and can identify from its records where goods have been held in a depot for a significant period. When they do a site audit they can simply ask to see those goods. If for whatever reason, the goods cannot be located the ABF is able to prove the offence. Alternatively, the ABF can review records of when goods left the depot and compare those records to the date the goods were cleared.

 

What you can do and Compliance

Compliance starts with all staff being well informed of the requirements, processes being implemented to facilitate compliance. However crucial and regular internal auditing of compliance with those processes are a must.  Contact your freight forwarder or customs agent to ensure that their procedures are accurate and processed correctly. Ask the customs broker for copies of the declarations and all movements to under bonds for quarantine or customs inspections.

Ensure you ask to check them for all cargo reports being reported including the details of each so you can double check. Do not leave one stone un-turned. This would be great for small importers to start with as an end of year audit, they can commit to doing themselves. It serves as a good practice and keep a record, of your checks. This will be very favourable when and if customs decide its your companies turn to get audited.

Unauthorised movement of goods, or compliance with depot license conditions was not highlighted by the ABF in 2016 as falling within its 5 areas of focus.

 

  1. Delivery Address Field on import declarations 

Delivery address is now suddenly very important as the ABF have found that delivery address field error was the third highest error type. The delivery error has increased from 16% to 28% in the last 2 years.

When completing an import declaration (is a statement made to the Australian Customs and Border Protection Service providing information about imported goods), you MUST complete the delivery address details regardless of the mode of transport. The ABF are now focusing on this field.

 

  1. Asbestos Laws Enforced

Asbestos is a prohibited import. A detailed list of what were the prohibited imports has not been provided yet, however, it is safe to assume the clear majority involved asbestos.

The ABF has come down hard on importation of asbestos. This was the real reason Customs focuses on asbestos now due to the high level if imported building material that contained asbestos. For example, second hand vehicles from the US and Japan receives special attention from ABF.

Testing

The industry has also faced high costs of testing goods for traces of asbestos and the prospect of goods containing asbestos being re-exported.  The compliance activity represents a change in the seriousness with which this issue is being approached.

Given the nature of the asbestos and the risk it poses to the community, Importers should not expect the attitude of the ABF to change but rather it is the approach of importers that needs to change. Imports of goods from any country need to undertake due diligence to ensure that there are zero traces of asbestos in their imported goods.

The older the vehicle, the more likely that a component will contain asbestos. The ABF have become skilled in identifying potential breaches.

 

What can you do?

Asbestos into Australia has become a real headache. You should always try to have it in writing from your supplier about asbestos. When you want to stay out of ” Hot Water” keep records of all your written emails.

As a small business you can also send a declaration to the supplier. This declaration helps in providing your necessary background checks for the goods you import.

Always try to ensure you do as many checks. Record and keep the checks archived somewhere safe. When customs comes knocking on your door, your ready to produce all the viable information about reaching out to different parties and ensuring you clear any negligence on your side. Work with your freight agent as some customs broker and their teams point the finger back at their clients. Always ensure you work with somebody you trust.

  1. Classification

Classification is when you obtain a specific tariff for the goods you import or even export.  It can determine what concessions can apply, what rule of origin can be used under free trade agreement, if dumping duties are applicable and if goods are subject to community protection questions.

Tariff advice normally provides the most certainty. This assists them in making business decisions about future imports of specific goods prior to committing to importation. A customs broker can do this on your behalf. They must only apply for a tariff advice only after informing the client of this approach and the client accepts or agrees to this approach. The ABF review this to ensure the import is complying with the tariff advice.

Classification is very important and much depends on the classification of goods that the ABF have this as an area of focus now.  You can always check the classification of your goods in the Schedule 3 of the Customs Tariff Act 1995. Get an idea of how the harmonised codes work and work with your agent to ensure you both reach the verdict of what the correct classification is.

2 heads are always better then one.

  1. Valuation of goods

The ABF also focus on the valuation field to ensure Australia’s import statistics are accurate. Free trade agreement with Korea, Japan and China have made a great number of goods coming out of these countries subject to duty free.

Customs valuation is the process where customs authorities assign a monetary value to a good or service for the purposes of import or export. The Australian Customs valuation system is within Division 2 of Part VIII of the Customs Act 1901. 2(a).

Customs will take the value of the imported goods as to what the transaction of the parties in the arrangement was.  However of like merchandise, it should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.

Its best practice to check with your customs agent when claiming GST.

Valuation Error

The valuation error increase ABF found was due to the valuation date which is the date of export?  The standard practice is to utilise the departure date of the vessel leaving its port as the date of fare. Customs is currently checking to see what the shipping line is reporting compared to the cargo reports the agents are lodging to check this.

 

WHAT IS THE PLACE OF EXPORT?  

The place of export can include:

  • where the goods are posted from
  • where the goods are packed in a container
  • the place, or last place, from which self-transported goods departed for Australia
  • the place, or first place, the goods were placed on board a ship or aircraft for export
  • where the goods crossed the border of the exporting country.

The valuation date also impacts the date of currency conversions for all foreign currency goods. The Customs value must be in Australian currency. A dedicated freight agent or customs broker will advise if the invoice is not in Australian dollars. The team will most likely check the date on the bill of lading and use it as the date of exchange. The will do this to determine the AUD amount. It also has to be necessary that every importer or exporter always keeps every financial transaction. This will serve as more practical evidence that you can use in your defense. If any possible hiccup does come around, your prepared and ready to face them head on. Before arranging any transport its always best to do a thorough check.

 

  1. Refund Applications

It is important to ensure the refund application container all correct information. Claiming for a concession or particular classification when applying for a refund carries the same level of seriousness. Be sure to check everything before making an application.

When you need a refund done, you can contact your customs agent or arrange it yourself as the importer. A refund refers to the return of some or all customs duty, GST, Wine Equalisation Tax and Luxury Car Tax paid on imports under circumstances outlined in regulation 126 and 126B of the Customs Regulations 1926 (Customs Regulations).

An applicant for a refund must:

  • demonstrate an entitlement to a refund on imported goods; and
  • supply all information required by Customs to process the refund application.

 

Conclusion

In conclusion the above are the focus areas in which ABF are now looking into. However, when lodging an import declaration, you must ensure that you provide accurate details for all your imported goods.

Always have copies of all documents saved for up to 5 years in case of an audit.  We have looked at all the ways that you as a business need to ensure that you have things in place. It is always best to talk to your freight agent and customs broker about all these situations that might arise.

What if this was a good read but your basically just wanting to learn how to start importing then you can check review our other article that can give you great tips on where to go. Remember every tip in this article is mainly so you can ensure your team is working for you and accurately lodging the correct details to customs. If anything happens the responsibility and once is on the importer or exporter.

If you require more help then contact us to help you make the best informed decisions about your shipping or navigate back Home to check our website.

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