Export automotive goods to Australia

Jump to:

• Overview
• No more tariffs
• Flexible rules of origin (RoO)
• Customs - advance rulings
• Innovation
• Additional information for selling goods in Australia
• Case study: exporting an electric car to Australia

Overview

The UK is a world leader in the automotive sector and Australia is an important market, with UK car exports to Australia totalling £392 million in 2022 (source: ONS Trade in good by commodity, February 2023). The UK-Australia Free Trade Agreement (FTA) creates an exciting landscape for automotive trade by removing barriers and opening up opportunities for continued growth, with the potential to increase the gross value added of the sector by around £200 million per annum (source: DBT (2021), UK-Australia FTA Impact Assessment).

The UK’s automotive strengths are well suited to Australia’s market conditions and innovation-friendly policies. Almost all of Australia’s vehicles are imported, with the UK being the second largest exporter of cars to Australia after Japan. The FTA will allow the UK the potential to grow its market share in Australia in specialist, luxury, and performance cars, in which it is a world leader.

Through the current Electric Car Discount Bill and associated policies, the Australian government has pledged tax cuts for Electronic Vehicles (EVs), and investment in 117 EV fast charging stations as well as a network of hydrogen refuelling stations. UK global exports of EVs have increased from £1.3 billion in 2017 to more than £10 billion in 2022 (source: HMRC Overseas Trade in Goods statistics, February 2023)and the UK automotive sector is well placed to benefit from these new opportunities in Australia.

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No more tariffs

The FTA cuts all import tariffs into Australia to 0% for automotive goods, introduces flexible rules of origin, simpler customs procedures, and fosters investment in green technology. These FTA provisions will make exports to Australia cheaper, faster, and more secure for UK automotive companies (including for cars, electric vehicles, car parts, tyres, buses and lorries).

Import tariffs into Australia are now 0% creating a potential saving of £34 million for UK automotive exporters.

Flexible rules of origin (RoO)

To qualify for zero tariffs, you will need to prove that your goods originate in the UK. Originating status in the FTA means a good or material fulfils certain conditions to be classified as originating from either the UK or Australia. This is now granted more simply and with less paperwork.

Regional value content

British carmakers will now have more freedom to source car parts and materials internationally and still qualify for zero tariffs provided the cars meet the relevant RVC requirements. RVC can be calculated via either the build-down method (using value of non-originating materials) or the build-up method (using value of originating materials).

Build-down method (non-originating materials)

1. Use RoO chapter text to calculate value of ‘non-originating materials’ in product A, and the value of Product A (‘value of the good’)
2. Subtract the value of the ‘non-originating materials’ from the value of the good itself
3. Divide by the value of the good and multiply by 100 for the RVC %
4. If the final figure is 40 and above, then product A qualifies as originating and can access preferential tariff rates when exported to Australia

Build-up method (originating materials)

1. Use RoO chapter text to calculate the value of the ‘originating materials’ used in product A, and the value of Product A (‘value of the good’)
2. Divide the value of the ‘originating materials’ by the value of the good and multiply by 100 for the RVC %
3. If the final figure is 40 and above, then product A qualifies as originating and can access preferential tariff rates when exported to Australia

Please find more information on RVC rules as well as the formulas for both methods in the guidance on using rules of origin in the FTA.

Flexible rules

Once a good qualifies for originating status, it is considered 100% originating. This means that if that good is then used in the production of another product, its full value is considered originating, and no account is taken of any non-originating materials used within it towards the new product.

For example, if a UK-manufactured engine contains 30% of non-originating materials but qualifies as originating from the UK under the Product-Specific Rules (PDF), the entire engine can be counted towards the car’s originating content; the company producing the car does not have to consider the non-originating materials in the engine.

How to Declare Origin

An importer may make a claim for preferential tariff treatment based on a proof of origin – either a declaration of origin or importer’s knowledge.

The declaration of origin may be completed by the exporter or producer and must fulfil the data requirements stipulated in the agreement. By completing the declaration, the exporter or producer is declaring that the good is originating and they possess evidence to demonstrate this.

Importer’s knowledge may be used by the importer, removing the need for a declaration, provided that the importer is in possession of documentation demonstrating the good’s originating status at the time the claim is made.

Product Specific Rules for Originating Status

What does the product specific rules and originating status look like now for the automotive sector? Here are a few examples:

Customs - advance rulings

The FTA’s simplified data and documentation requirements will help to ensure finished vehicles and car parts exit customs quickly, provided all requirements have been met.

Advance rulings

Businesses can also request a legally binding ruling from the relevant customs authority on the tariff classification and origin of their product prior to exporting their goods. Australia will ensure that the business receives the ruling within 90 days after receiving the request. These rulings will take effect on the date they are issued and remain in effect for at least three years provided the law, facts and circumstances remain the same. Either the exporter or importer may apply for an advance ruling.

Innovation

The FTA sees the UK and Australia commit to cooperating on facilitating trade. This may include collaboration between research institutions, industries and businesses related to emerging technologies. The FTA provides for a bespoke Strategic Innovation Dialogue, in which industry experts may be invited to take part, which will act as a cooperative forum where the UK and Australia will look to promote and facilitate innovation in their territories.

UK exporters can have confidence that any valuable Intellectual Property (IP) will be protected when trading with Australia; the new FTA includes commitments that will both protect and enforce IP rights, both registered and unregistered.

Additional information for selling goods in Australia

Selling goods in Australia will require following certain rules and regulations according to the agreements you have in place with your buyer. For further information on incoterms and import conditions into Australia, please check the following resources:

• International trade contracts and incoterms
• The Australian Border Force regulates all goods imported into Australia. You’ll need to provide import declarations and documents and pay all relevant duties and taxes.
• In order to benefit from preferential tariff treatment under the FTA, businesses must make certain declarations that satisfy data requirements. Further details can be found in Annex 4a.
• Goods and Services Tax (GST) is a tax on most goods and services in Australia. The current GST rate is 10%. Learn more about GST on the ATO’s website. Our e-commerce explainer provides an overview of the different applications of GST for B2B and B2C sales.
• Certain goods must be correctly labelled with a trade description before they can be imported into Australia. Not all imported goods need labelling, you can find out more about labelling requirements on the Australian Border force website.

Case study: exporting an electric car to Australia

Please note that this case study is illustrative only and should not be relied on as a substitute for your own research. Exporters should check on the most up to date rules and processes with the relevant customs authority.

Actions taken by the exporter before exporting

1. Agree incoterms and terms of payment with importers in Australia

"We agreed on Shipping DAP to Australian importer. This means we will be responsible for all costs and risks associated with the delivery to the final agreed place."

2. Determine the HS code(s)

Use the UK's Trade Tariff tool to find your HS code

"The HS code for our vehicle designed to transport people is HS 87037090"

3. Check if goods are prohibited

Search the list of goods that are restricted or require a permit on the Australian Border Force website.

"Our product is not restricted"

4. Gather commercial documents and submit to transporter

• Commercial invoice (content of goods and demand for payment)

"Our product is a new 1X Nissan Juke 2022 (Electric), valued at 50,000 AUD"

• Packing list (weight, packaging and carton numbers of goods)
• RoO documents

"The car meets the RVC25 requirement and therefore qualifies for originating status and 0% import tariff into Australia."

The UK exporter can provide an origin declaration for the Australian importer, or the importer can make a claim for preferential tariff treatment based on Importer’s Knowledge. The Australian importer can use Importer’s Knowledge based on either having documentation demonstrating that the good is originating, or being able to reasonably rely on supporting documentation provided by the UK exporter or UK producer that the good is originating. The importer must be able to provide such documentation to Australia’s customs authorities upon request.

5. Gather shipping documents (done by the transporter)

"Air waybill or bill of landing, as the good is sent by sea"

6. Get UK customs clearance

Make a export declaration through customs declaration services

7. Check if you need to submit an Exit Summary Declaration

"Safety and security requirements met, do not need to submit Exit Summary Declaration"

Actions taken by the importer to clear Australian customs

1. Ensure they possess all applicable permits

Obtain an import approval to import a road vehicle into Australia

2. Submit an Impending Arrival Report at (air)port of entry

3. Submit an Actual Arrival Report at (air)port of entry

4. Submit a customs import declaration

Customs import declaration is required for goods worth more than 1,000 AUD, otherwise declare using self-assessed clearance declaration.

"In our example full Customs Import Declaration is needed as value is above threshold"

5. Pay Australian VAT/LCT (if due)

"VAT applicable as importer intends to sell in Australia, rate is 10% - no need to pay luxury car tax (LCT) as below threshold"

Note: Vehicle imports into Australia are subject to:

• Australian VAT (known as Good and Services Tax, or GST) at a standard rate of 10%
• Luxury car tax (or LCT) for certain categories, at 33% of value above threshold (check luxury car tax rate and thresholds)

For further information on exporting from the UK, use the check duties and customs procedures for exporting goods tool.

For further information on importing into Australia, use the DFAT FTA portal.