What are Production Assist Costs?
Production Assist Costs relate to tangible and intangible assistance provided to a foreign supplier by an Australian buyer of imported goods. If this assistance is provided free of charge or at a reduced cost then the cost of this assistance (to the extent it is not already included in the price) needs to be included in the value declared to Customs upon importation. The production assist costs that fall within this description are commonly referred to as “Assists”.
Categories of Assists
a) materials, components or other goods that form part of the imported goods;
b) materials consumed in the production of the imported goods;
c) tools, dies, moulds or other machinery or equipment utilised in the production of the imported goods;
d) art work, design work, development work and engineering work (including models, plans and sketches) – the design of which has been undertaken outside Australia;
e) inputs in the production of the goods referred to in (a) to (d) above;
f) overseas transportation and packing costs relating to (a) to (e) above;
g) foreign customs duties, sales tax, or other duties or taxes on production tooling, work goods or subsidiary goods;
h) repairs or modifications to the materials, components, subsidiary goods, tools, dies, moulds, and other goods referred to above.
An example of a transaction involving “Assists” would be an Australian white goods wholesaler providing Australian standard electrical cords and plugs to a Chinese manufacturer for incorporation into Australian imported white goods. If the cords and plugs are provided free of charge to the manufacturer then the value of the cords and plugs would need to be added to the suppliers invoice price to arrive at an acceptable Customs Value.
It should be noted that it is irrelevant whether duty is being paid on the imported product as the importer has an obligation to report accurately to Customs and, as such, any under-valuation would fall within the ambit of the Infringement Notice Scheme.
As always, Magellan Logistics stands ready to assist with determining whether your business is exposed due to non-compliance with the above requirements. If you would like more information on this subject or simply wish to clarify any of the foregoing detail please contact Jeff Kershaw at email@example.com or by telephone on 0418 543 994.