Australian importers do not only import goods to satisfy the Australian retail market. Some consignments are imported with the express intention of exporting them again at some time in the future. It might seem strange, but it’s common practice especially when those goods are used by Australian manufacturers to complete their goods for export.
Logically, this import-export revolving door system would add greatly to the cost of goods, but the introduction of legislation has tried to reduce that impact as much as possible. The Tradex Scheme is the newest and the most effective to be introduced, and for importers represents the best cost-saving option available.
Why? Because it’s designed not only to negate the cost of import duty by allowing qualifying importers secure duty refunds, but actually streamlines the system completely. In fact, with Tradex, the financial pressures on importers are eased considerably.
How the Tradex Scheme Benefits Importers
The Tradex Scheme was originally introduced in 1999 to replace the Duty Drawback Scheme that had existed under the Customs Act 1901. The drawback system was a welcome development, with importers reclaiming both the duty and the Goods and Services Tax (GST) payable when importing goods. But the refund was only available once the imported goods were exported to their destination, which means a waiting period of several months before those costs are recouped.
The Tradex Scheme effectively cuts out that waiting period by qualifying the importer for an exemption from customs duty and GST. So, instead of paying those costs and reclaiming them later, the payment is skipped on the understanding the goods imported will be exported anyway.
The savings can be significant, not least in the crucial area of cash flow. For example, an importer might face a customs duty bill of 5% on a consignment and an additional 10% GST payment at the time of importing.
But with the Tradex Scheme, that payment not longer applies, so expenditure is lower. Perhaps even more importantly, that cost is not passed on along the supply chain, ensuring exporters benefit too.
Who Qualifies for the Tradex Scheme?
Of course, the scheme is not available to simply anyone. According to AusIndustry, the division of the new Department of Industry responsible for the implementation for the Tradex scheme, only those importing one of 3 categories of goods are eligible for the scheme.- Imports that are intended to be exported again
- Imports that are to be incorporated in goods to be exported
- Imports that are to be used in manufacturing goods to be exported
Also, the exportation of these goods must take place within one year of their arrival in Australia, or a longer period subject to the approval of AusIndustry.
The range of goods that can fall into one or more of these categories is extensive, but ineligible goods include those which are:
- intended for sale in retail outlets at duty-free or other tax-free prices
- excise-equivalent goods, meaning if they were produced in Australia, they would be subject to excise duties anyway. These goods include most forms of alcohol, tobacco products and petroleum products.
Getting a Tradex Order
Like most matters relating to import and export paperwork, complexity is commonplace when it comes to securing a Tradex order. You can download the application pack directly from the AusIndustry and fill in the forms independently, but it’s best to let properly versed professionals take care of the paperwork – like your International Cargo Express team.
For many importers, the biggest challenge is in having the necessary paperwork in order to satisfy the scheme. Applying for the Tradex order must be done before importing any goods, but poorly organised applications can take as long as 30 days if AusIndustry decides to carry out a more detailed assessment.
The good news is that once your application is accepted there is no need to apply again ahead of any future consignments. So, getting it done right first time is well worth the time and effort.
Of course, this is dependent on the necessary paperwork being kept in proper order. This includes not only records of the imports nominated to be covered by the scheme, but also any manufacturing records where the imports were incorporate on finished products for export.
Contact Your ICE Team
At International Cargo Express, we’re always interested in helping our clients cut their costs by taking advantage of the full range of concessions and entitlements they are entitled to. To find out exactly how the Tradex Scheme can benefit you, simply call your nearest ICE team. Then why not let us take care of it, and guide you to lower costs and greater competitiveness.
