Importers ask for GST relief under new deferment scheme

The following article is taken from the AFR. It details the latest discussions, which signal deferring of taxes and customs duties, in response to COVID-19.

Consumer goods importers have asked the federal government to defer taxes and customs duties for at least six months to relieve a cash squeeze caused by COVID-19 and stop food, clothing and furniture being stockpiled at ports.

“While state government and port corporations are currently contingency planning and examining staging sites as required to store containers in the event of supply chain failures, this will be a futile exercise if goods cannot be cleared from customs control into home consumption,” Susan Danks, head of customs and regulatory compliance for the Freight & Trade Alliance (FTA), said in a letter to Treasury last week.

Companies that import goods into Australia say they can’t afford to pay taxes and duties on time because of cash squeezes.

Importers must pay duty on goods brought into Australia, as well as goods and services taxes and an import-processing charge.

But the FTA, which represents a broad range of companies including Bunnings, Woolworths, Costco and IKEA, claims supply chain disruptions are making it difficult for many companies to raise enough cash to pay the fees on time, jeopardising the timely release of essential goods from ports.

A medium-sized customs broker can pay about $5 million a month on behalf of importers to clear goods for home consumption, according to the FTA. 

The industry group has met with the Australian Border Force and the Australian Taxation Office over the past week to discuss options for deferring taxes and duties.

‘There’s a lot of stock on its way.’

— Paul Zalai, Freight & Trade Alliance director

FTA director Paul Zalai told The Australian Financial Review the government agencies had been responsive, and that fast action was needed to alleviate potential congestion at ports as manufacturing resumed in China.

“There’s a lot of stock on its way,” Mr Zalai said, adding that online sales of consumer goods in Australia had exceeded importers’ expectations.

Transport groups are also being hit with higher landside access fees from stevedores Patrick, which is 50 per cent owned by logistics group Qube Holdings, and DP World when they pick up containers for importers.

Patrick lowered the fees for exporters earlier this year in recognition of the troubles exporters (which include many agricultural producers) were facing from the drought, but raised import fees and now charges trucking and rail companies $114.50 to collect every full container arriving in Sydney and $125.80 for containers arriving in Melbourne. 

‘Tone deaf’

DP World has followed suit and plans to charge companies $112.10 to collect containers from Sydney’s Port Botany from May 8 and $125 to collect containers from Melbourne’s West Swanson terminal from May 1.

Neil Chambers, director of Container Transport Alliance Australia, said far more containers were imported than exported, and fees were passed down the supply chain to importers and then onto consumers, 

Mr Chambers has written to Victorian Ports Minister Melissa Horne and NSW Transport Minister Andrew Constance to ask for the access fees to be regulated, claiming that DP World is “tone deaf” to the cash-flow squeezes many businesses are experiencing. 

DP World said it had split its import and export fees at the urging of industry and government, “who wanted us to follow the structural change brought in by our major competitor”.

The stevedore said it had discounted export containers by 13 per cent in Sydney and by 19 per cent in Melbourne and was cheaper than its major competitors. “Like other industries, we are dealing with the impacts of COVID-19,” a DP World spokeswoman said.

“Trade has dramatically reduced with no visible end in sight. It would be financial suicide to discount our current rate structures any further than we have already.”

But Mr Chambers said the stevedore had also raised “no show” fees for trucks that did not arrive in time for their booked slot in Melbourne by 40 per cent to $210.35 an event, and that there was no legislation to stop stevedores increasing these charges and access fees whenever they liked.

Written by Jenny Wiggins – Infrastructure Reporter AFR

Published by ACF