Deferred GST and export loan facility – A welcome break for importers and exporters

GST is usually a subject left to our friends and fellow Corporate Partners over at William Buck Chartered Accountants to explore. However, just like the dreaded Coronavirus has been pushing our businesses into new territory, the Deferred GST Scheme being implemented by the Australian Government is forcing our humble logistics firm to delve headfirst into the wonderful world of GST to an extent never seen before. What fun!

So, let’s get down to the nitty gritty – What is the Deferred Goods and Services Tax (DGST) Scheme and how can we, as importers, utilise this initiative to help our businesses soften the blow of the pandemic?

As the Australian Government ATO website puts it, “As an importer, the deferred goods and services tax (DGST) scheme allows you to defer payment of GST on all taxable imports into Australia”. To break that down even further, the government is allowing all eligible Australian businesses that import cargo from overseas to pay the GST component of their shipments with the first Activity Statement lodgement after the shipment, instead of at the time of arrival of the goods in Australia.

This facility is quite obviously a huge cash flow boost for importers, given that the duties payable are often substantive. The extra time will provide some much-needed breathing space for importers to collect these monies from their customers by way of product sales – transactions which in some cases may not have already occurred by the time the GST has ordinarily become due.

It probably sounds a little too good to be true at this point, so you’re likely wondering, what’s the catch?

There are some risks to be considered, in that BAS payments become much greater under this scheme, which could potentially be difficult for struggling businesses to overcome. Another factor to be considered is that if you currently report quarterly, GST lodgements must be changed to monthly under this scheme.

There are some eligibility requirements to be met. To participate in the deferred GST scheme, you must:

• Have an Australian business number (ABN).
• Be registered for GST (you can register for GST and apply for an ABN on the one form if you don’t already have an ABN).
• Lodge your activity statements online and pay electronically.
• Lodge your activity statements monthly (if you are currently lodging quarterly, this will be changed to monthly once the ATO receives and approves your application.
• Ensure the goods or excise-equivalent goods are for home consumption.
• If you are a member of a GST group, ensure your nominated representative is registered for the DGST scheme.

You may not be eligible if:

• You are not up to date with your tax returns or payments – this includes members of GST groups, branches and joint ventures.
• In the past three years, you or anyone relevant to the application, has been convicted or penalised by a court for specific offences.

Make sure you talk to your Customs Broker. They should be well informed on the subject and will provide information on how they can accommodate your intention to participate in the scheme.

Also of interest to Australian exporters, the Government announced in April this year a $500m Export Capital Facility for businesses that are unable to secure finance from commercial sources due to the COVID-19 situation. The package is being administered by Export Finance Australia and will cater to exporters with a minimum annual turnover of $250,000.

The initiative has been developed to provide access for exporters to much-needed capital to develop their businesses. The facility may be used for:

• Working capital support.
• Capital investment.
• International expansion.
• e-commerce investment.

The commitment shown by the Government to support Australia’s supply chains with such substantial and unprecedented schemes highlight the importance of keeping the industry healthy during the pandemic and beyond. We encourage members to consult with their logistics partners about Government support in the supply chain realm, and seek out all options available to help your business reach the other side of the pandemic in the best possible shape.

At SternaGL, we combine our logistics experience and knowledge with exceptional human talent to provide you with a tailored solution for your cargo needs. From small parcels, to over-dimensional project cargo, and everything in between – our dedicated team utilise their extensive skill and expertise to manage the journey of your freight from origin to destination

– intact and on time.

Cesar Lopez – Director – cesar@sternagl.com

www.sternagl.com