Here's an example calculation for importing a laptop into Australia:
First, we need to know the product, shipping and insurance price. For this example, the product price is AU$1500.00 and shipping & insurance cost is AU$120.00.
Second, we need to determine what the Customs Value (CV) is for the import. Australia uses the Free On Board (FOB) method for determining the CV. In this case the CV for the import is AU$1500.00 as using FOB calculation method, duty is calculated on the cost of goods alone, and not the shipping and insurance.
Third, we need to check whether the import exceeds the de minimis and calculate the duty payable on the import. In this example, Australia has a duty de minimis of AU$1000.00, we so know that this import will attract duty – however, laptops have a 0% ad valorem duty so the duty payable would be AU$0.00.
Fourth, we need to calculate the sales tax payable. Unlike duty, sales tax is payable on the product, shipping, insurance and any duty that may be payable. Australia has a 10% GST rate for most goods and commodities (laptops included), so in this example the GST payable would be AU$165.00 (Laptop = AU$1500.00 + Shipping & Insurance = AU$120.00 + Duty = AU$0.00).
Fifth, we need to check whether any other additional taxes are applied to the import. Australia has an Import Processing Charge (IPC) on orders valued over AU$1000.00. The amount payable depends on the value of the import, but in our example an AU$88.00 charge is applied.
Finally, we can combine the amount payable to customs, with the cost of the goods, shipping and insurance to calculate the total landed cost for our import:
- + AU$162.00 (GST)
- + AU$0.00 (Duty)
- + AU$88.00 (Import Processing Charge)
- = AU$250.00 (Payable on import)
- + AU1620.00 (cost of product, shipping & insurance)
- = AU$1870.00 (Total landed cost)
Note that couriers or postal services may also include additional handling or clearance fees