relationship between import GST threshold and retail commercial property

[Intrinsic_Value]

I have been involved in participating in a new business. First time i have been involved in onselling to retail from an import side of things (its just a side focus of the main business).

A basic back ground of the business: we have secured the Australian rights for an international business (not prepared to go into more details on a public forum).

Part of the business involves onselling of products from overseas for retail sale to the Australian based franchisee network (no substitutable products available in australia, so reasonably price inelastic)

Anyway this is just background.

The key to me is the actual cost of bringing in products in a value greater than $1k to service the local market.

Its much much higher than 10% quoted by the media as the GST inputed value.

To get around this i have divided import purchases into two segments:
(a) those that i can get around all of this rubish by importing in lots less than $1k. I can achieve a 'net' import cost of around 5% on this, including international transportation costs.
(b) those that i cant get around the $1k import limit. In this case my cost of importation jumps to 35% including transportation costs, GST, import duties, various govt charges and fees (from the port) etc etc

Yes thats right, 5% to 35% jump.

Now from the business perspective, its irrelevant. I just put my mark up on everything. The end market has no choice, they have to buy my products.
Obviously, to compensate me for the inconvenience of doing all this work, i obtain a higher mark up on import purchases under $1k.

But here is where its relevant to the retail commercial market.

This market is getting scr**wed by the arbitary govt policy on imposing a GST (and associated cost) free situation on international purchases under $1k.

If this policy is changed, expect to see a significant change in the underlying prosperity of the retail industry (and hence indirectly their ability to pay rent).

Just a heads up.

 

[sanj]

With the imports are you talking small airfreight/courier lots Vs larger FCL/LCL lots?

Im curious re th 5% to 35% jump as it certainly seems to be excessive.

I also dont think you are allowed to legally avoid paying import duty if youre importing to onsell despite it being under 1k although im sure a lot of people dont declare it. I could be wrong though, i only import 1 item into australia (rest is all exports) and it is GST free.

Port and local transport costs here are ridiculous though, you can pay up to $1500 to clear and deliver a container in Perth metro and it can take up to 10 days.

I pay less than half that in Singapore and it is usually 1-2 days, occasionally 3.

 

[dan c]

People don't understand how GST works.

If you are registered for GST, and running a business, you get a GST credit for any GST you have paid.

ie - If you pay $100 GST on your import, you claim this back on your next BAS. If you sell said item for $1500 + GST of $150, your GST bill for the month / quarter (assuming no other sales) is $50. ($150 sale less $100 purchase)

So the only people effected by a a change to the $1000 threshold are end consumers, and businesses with a turnover of less than $75k.

 

[Scott No Mates]

Pretty much as Dan described above but in answer to your question - there is no link between rent & the markup that you place on a product.

Why? You rent from the lessor who doesn't care if you make your own widgets, buy from ebay or have child labour in some third world country make them on consignment. He doesn't care what your mark up is or how you determine your retail price. His concern is that you can pay the freight every month on the due date.

 

[Trogdor]

It is interesting, there does seem to be a modest shift in retail tenancies away from clothing / accessories etc.. into food / cafes / service type tenants (i.e. more of the latter, less of the former).

Have others noticed this?