Every Australian importer pays two main charges to the Australian Border Force on commercial shipments: customs duty and Goods and Services Tax (GST). Together they can add 10% to 15% or more to the cost of your goods, depending on tariff classification and cargo value. Yet many importers don’t understand exactly how these charges are calculated, which means they can’t estimate landed cost accurately, spot errors on customs declarations, or identify opportunities to legally reduce what they pay.
This guide explains how import duty and GST are calculated in Australia, what makes up total landed cost, and how importers can plan around these charges to keep landed cost predictable and manageable.
What is import duty in Australia?
Import duty, also called customs duty, is a tax charged by the Australian Border Force on qualifying imported goods based on the customs value of the shipment and the tariff classification of the goods.
Key characteristics of Australian import duty:
- Applied to most commercial imports valued over AUD 1,000
- Calculated as a percentage of the customs value
- Rate varies by tariff classification, typically 0% to 10%
- Payable to Australian Border Force at the time of import declaration
- Can be reduced or eliminated through Free Trade Agreements or Tariff Concession Orders
Duty is separate from GST, though both are typically paid together at the point of import clearance.
How is Australian import duty calculated?
Import duty is calculated by multiplying the customs value of the goods by the duty rate applicable to their tariff classification under the Australian Customs Tariff.
The formula:
Duty = Customs Value × Duty Rate
Example:
- Customs Value: AUD 50,000
- Duty Rate: 5%
- Duty Payable: AUD 50,000 × 5% = AUD 2,500
The two variables that determine your duty:
- Customs Value: covered in the next section
- Duty Rate: determined by the tariff classification of your goods
Getting either wrong changes the duty amount. This is why licensed customs brokers spend real time on tariff classification — a difference between 5% and 10% duty on a large shipment is a significant sum.
What is customs value?
Customs value is the transaction value of the imported goods, meaning the price actually paid or payable for the goods when sold for export to Australia, adjusted according to specific rules set out in the Customs Act.
For most commercial shipments, customs value equals:
- The commercial invoice price of the goods
- Plus certain additions if not already included (packing costs, tools supplied to the seller, royalties related to the goods)
- Minus certain deductions if included in the invoice (post-import transport, duty, GST, quantity rebates)
Customs value is what appears on the commercial invoice from your overseas supplier, converted to Australian dollars at the applicable exchange rate.
Note: customs value does not include international freight or insurance to the Australian port. Those are added later in the GST calculation, not the duty calculation.
What is GST on imports?
GST on imports is a 10% Goods and Services Tax charged on the taxable value of the importation at the time of import clearance, which is the customs value plus duty plus international transport and insurance.
Australian GST on imports applies to:
- Most commercial imports valued over AUD 1,000
- Both dutiable and duty-free goods
- Payable to Australian Border Force at import clearance
GST-registered businesses can generally claim the import GST back as an input tax credit on their next Business Activity Statement, so for most commercial importers, GST is a cash flow issue rather than a permanent cost.
How is GST on imports calculated?
GST on imports is calculated at 10% of the taxable value of the importation, which is the customs value plus customs duty plus the cost of international transport and insurance to the Australian port.
The formula:
GST = (Customs Value + Duty + International Freight + Insurance) × 10%
Example, continuing the previous scenario:
- Customs Value: AUD 50,000
- Duty (5%): AUD 2,500
- International Freight to Australia: AUD 3,000
- Insurance: AUD 500
- Taxable Value = AUD 56,000
- GST = AUD 56,000 × 10% = AUD 5,600
Total charges to ABF for this shipment:
- Duty: AUD 2,500
- GST: AUD 5,600
- Total: AUD 8,100 on a $50,000 shipment
Notice that GST is calculated on the customs value plus duty plus freight and insurance, not just on the goods value alone. This is why understanding the calculation matters when estimating landed cost.
How is total landed cost calculated?
Total landed cost is the customs value of the goods plus all charges required to move them from the overseas seller to the importer’s Australian warehouse, including duty, GST, freight, insurance, customs clearance, local delivery, and any incidental fees.
A complete landed cost breakdown typically includes:
- Goods cost (customs value)
- International freight (sea or air)
- International freight insurance
- Customs duty
- GST on import
- Origin handling charges
- Destination terminal handling charges
- Customs clearance fees
- Local transport to warehouse
- Any biosecurity or inspection charges
For commercial planning, understanding all ten line items matters more than getting the freight rate quote alone. A “cheap” freight rate can hide expensive destination charges that push landed cost well above a competitor’s quote.
What can reduce your import duty?
Australian importers can legally reduce import duty through Free Trade Agreements, Tariff Concession Orders, correct tariff classification, and using duty concession schemes for specific industries or product categories.
Four main mechanisms:
- Free Trade Agreements: preferential duty rates for goods qualifying under Australia’s FTAs with countries like China, Japan, Korea, ASEAN, UK, and US. See our full guide on Free Trade Agreements
- Tariff Concession Orders (TCOs): reduce duty to zero on goods with no equivalent Australian manufacture, common for specialised industrial equipment
- Correct tariff classification: making sure goods are classified under the lowest applicable duty rate, sometimes across genuinely different classifications
- Duty drawback: refund of duty paid on goods later exported or destroyed
A licensed customs broker reviews all four mechanisms as part of routine clearance work. Importers doing this in-house often miss opportunities simply because they don’t know all the options exist.
How does customs value affect duty and GST?
Because both duty and GST are calculated on the customs value (with GST also including duty, freight, and insurance), any error in customs value cascades through both calculations, meaning under-declared or over-declared value produces incorrect duty and incorrect GST at the same time.
Common customs value issues:
- Under-declared invoice: some overseas suppliers offer lower invoice values to reduce duty, which is illegal and triggers penalties when detected
- Missing additions: royalties, tooling, or supplier assistance not included in customs value understates duty
- Wrong exchange rate: customs value is converted using ABF’s applicable rate at time of import, not the invoice date rate
- Freight and insurance treatment: freight to origin port is included in customs value; freight from origin port to Australia is not
Getting customs value right is worth the time. ABF audits do detect discrepancies, and reassessment plus penalties are more expensive than lodging correctly the first time.
How do Incoterms affect duty and GST?
Incoterms don’t directly change how duty and GST are calculated, but they determine who is responsible for import clearance and therefore who lodges the customs declaration and pays these charges to the Australian Border Force.
Practical implications:
- Under FOB, CFR, CIF, and similar terms, the Australian importer handles import clearance and pays duty and GST
- Under DDP terms, the overseas seller is responsible for delivered duty paid, meaning they arrange clearance and pay all Australian duty and GST — often at significant cost if they don’t understand Australian tariff rules
- Under EXW terms, some Australian importers accidentally take on origin-side responsibilities they weren’t expecting
For a fuller look at how Incoterms shape the shipment, see our guide on Incoterms explained.
How does customs clearance work for duty and GST payment?
Customs clearance involves lodging an import declaration through the Integrated Cargo System, which calculates duty and GST payable, and importers pay the Australian Border Force before the goods can be released for delivery.
The clearance process:
- Broker lodges Full Import Declaration with tariff classification, customs value, Incoterm, and Free Trade Agreement claim (if applicable)
- ABF system calculates duty and GST payable
- Importer pays the total amount via broker (or directly to ABF)
- ABF releases the goods for onward transport
- Details flow to the importer’s Business Activity Statement for GST credit claim (if GST-registered)
For a full picture of how customs clearance works and what a broker does, see how customs brokerage works in Australia.
How Sealogic helps with duty and GST
Sealogic’s licensed customs brokerage team reviews tariff classification, applies Free Trade Agreement preferences where eligible, identifies TCO opportunities, verifies customs value calculation, and lodges import declarations to ensure duty and GST are calculated correctly on first submission. Duty and GST management connects to our broader sea freight services across Australia and freight forwarding scope, so total landed cost is transparent and predictable across the shipment.
For businesses reviewing their overall freight partner setup, our companion guide on how to choose an international freight partner in Melbourne covers what to look for beyond just clearance and duty.
FAQs
How is import duty calculated in Australia?
Import duty in Australia is calculated by multiplying the customs value of the goods by the duty rate applicable to their tariff classification under the Australian Customs Tariff.
How much GST do I pay on imports in Australia?
GST on imports in Australia is 10% of the taxable value of the importation, which is the customs value of the goods plus customs duty plus international transport and insurance.
What is the difference between customs value and invoice value?
Customs value is based on the invoice value of the goods but adjusted according to Customs Act rules, typically including certain additions (like royalties or tooling) and excluding certain items (like post-import transport or duty).
Do I pay duty on all imports into Australia?
No. Imports valued under AUD 1,000 are generally exempt from duty and GST, though goods above that threshold typically attract both, unless the goods qualify for duty-free treatment under a Free Trade Agreement or Tariff Concession Order.
Can I claim GST back on imports?
GST-registered businesses can generally claim import GST as an input tax credit on their next Business Activity Statement, making import GST a cash flow issue rather than a permanent cost for most commercial importers.
How can I reduce my import duty in Australia?
Import duty can be reduced by claiming Free Trade Agreement preferences, applying for Tariff Concession Orders on goods with no Australian equivalent, ensuring correct tariff classification, and using duty drawback for goods later exported.
Does Sealogic help calculate duty and GST?
Yes. Sealogic’s licensed customs brokerage team calculates duty and GST as part of routine clearance work, applies FTA preferences where eligible, verifies customs value, and provides landed cost breakdowns for Australian importers.
Conclusion
Import duty and GST aren’t optional. Every commercial importer pays them, and understanding how they’re calculated is the difference between accurate landed cost estimates and unpleasant surprises at clearance. The good news is that both are calculable, predictable, and legally reducible through the right combination of tariff classification, Free Trade Agreement claims, and Tariff Concession Orders. To discuss duty and GST on a specific shipment or an ongoing import portfolio, contact the Sealogic team.