VALUE FOR DUTY VALUATION A discussion on the process of determination of Value for Customs purposes

Our means of attack Class discussion Notes, diagrams Theory questions Practical exercises Class instruction as required On-line access

Value for Customs Sale Level Charges, costs and expenses: include exclude

How do we get there? Legislation Understanding Rationalization

How do we get there? Build the tree! A process of: inclusion elimination justification

Customs Value Basic principles? –Based on GATT Agreement – Value in the commercial transaction – Standardization of influences – Level of sale

GATT Agreement Transaction Value Identical Goods Similar Goods Computed Value Deductive Value Fall Back Value

Transaction Value Value in the commercial Transaction Transaction Value Section 159(1) Section 161

Transaction Value (S161) Adjusted Price S161(2) in the Import Sales Transaction - Deductible Financing Costs - Costs for: =>assembly, erection, construction, maintenance & technical assistance; =>post-importation, and; =>able to be accurately quantified - Aust. Inland Freight & Insurance - Deductible Financing Costs - Deductible administrative costs - Overseas Freight & Insurance & Price Related Costs; - production assist costs - packing costs - foreign inland freight & insurance - commissions, other than buying - royalties & licence fees - proceeds of subsequent resale

Exercises => Explain what they are and when they are used Import Sales Transaction Deductible Financing Costs Assembly, maintenance, technical assistance Australian Inland freight & Insurance Deductible Administrative Expenses Overseas Freight & Insurance

Place of Export Posted Packed in a container Self-transported goods Placed on ship or aircraft for export Border of exporting country As determined in a particular instance

Place of Export Refer definition of Foreign Inland Freight/Insurance Overseas Freight/Insurance Exchange Rates Section 161(J)(4) “Day of Exportation”

Exercises => Explain what these are Price Price related costs –production assist costs purchaser’s material costs purchaser’s tooling costs purchaser’s work costs purchaser’s subsidiary costs –packing costs –foreign inland freight & insurance –buying commission –royalties –proceeds of subsequent resale

Purchaser’s material costs Production materials –supplied directly or indirectly –free of charge or at reduced cost cost of acquisition cost of production Cost of transporting Cost of repairs or alterations

Purchaser’s subsidiary costs Subsidiary Goods Work Goods –supplied directly or indirectly –free of charge or at reduced cost cost of acquisition cost of production Cost of transporting Cost of repairs or alterations outside Australia

Purchaser’s subsidiary costs Subsidiary Services –supplied by an unrelated person cost of supply –supplied by a related person as determined Cost of further services other than work services Cost of further services outside Australia relating to work services

Purchaser’s work costs Work Goods or Work Services –supplied by an unrelated person cost of acquisition cost of production –supplied by a related person as determined Cost of transporting and/or repairs outside Australia Cost of work services or further services outside Australia relating to work services

Packing Costs Materials and Labour –by or on behalf of the purchaser –in respect of the goods –preparing the goods for export to Australia fumigating, cleaning, coating,wrapping placing them in the condition in which imported –excludes exempted pallets or containers

Commissions Refer S155 - Buying Commissions –acting on behalf of the purchaser –in the Import Sales Transaction Excludes commissions paid where the agent acts as a principal in the Import Sales Transaction or in similar transactions or provides other services

Royalties In respect of the imported goods S154(1) Refer S157 –Amount paid or credited as consideration for: making, use exercise, vending of invention right to use design, trademark, information, equip’t technical knowledge supply of assistance –Regardless of when paid

Questions? Transaction Value Exam questions focus on; Determination of price Application of charges be aware when provided with a list of costs some may be already included External elements commissions, royalties External influences exchange rates Intrinsic influences assists

Other than Transaction Value Rare to get a question on this area Identical Goods Similar Goods Computed Value Deductive Value Fall Back Value BUT WE SHOULD COVER THEM!

Other than Transaction Value When Transaction Value unable to be determined Section 161H No Import Sales Transaction Transaction Value unable to be determined Later sale is subject to restrictions, other than imposed by Australian law impose geographical limits do not affect commercial value of the goods RELATED PERSONSS154(3) S161H(2)

Identical Goodss156(1) same in all material respects produced in the same country produced by the same manufacturer Identical Goods ValueS161(A) “comparable identical goods” “unit price”

Similar GoodsS156(3) closely resemble the imported goods physically functionally and commercially interchangeable produced in the same country as the imported goods produced by or on behalf of the producer of the imported goods Similar Goods ValueS161(B) “comparable similar goods” “unit price”

Deductive Value Contemporary sales S161C - at or about the same time - same level - no relationship or assists - sufficient number of units - reference sale

Deductive Value Later sales S161D - within 90 days - same level - no relationship or assists - sufficient number of units - reference sale - unit price

Deductive Value Derived goods sales S161D - derived goods - derived goods sale - within 90 days - same level - no relationship or assists - sufficient number of units - reference sale - unit price

Computed ValueS161F The sum of: Australian arranged - material costs - subsidiary costs - tooling costs - work costs Value of other production goods costs Other production costs, charges & expenses Profit & expenses as are usually added Packing costs Foreign Inland Freight & Insurance

Fall Back Value Start again as per S159, except for: selling price in Australia higher of 2 value domestic value cost of production other than for: identical or similar goods sale price to another country minimum values arbitrary or fictitious values

Questions? Other than Transaction Value Exam questions unusual. Theory Questions Focus on: Determination of price - which method would you use? - Consider the options, what would you look for? Determination of dutiable costs, charges & expenses - External elements commissions, royalties - External influences exchange rates - Intrinsic influences assists

Questions? Other than Transaction Value Practical Questions Focus on: Determination of price - which method would you use? Consider the options - what information is provided? Determination of components to consider Determination of dutiable costs, charges & expenses External elements commissions, royalties External influences exchange rates Intrinsic influences assists

Questions?