Import GST and customs duties are among the most frequently miscoded items in accounts payable. They appear on freight forwarder invoices alongside international freight charges and customs broker fees, and each component requires a different treatment. Processing the whole invoice under a single account code or a single GST rate produces errors in BAS claims, distorts landed cost calculations, and leaves COGS inaccurate.
This guide explains what each component of an import-related invoice represents, how each should be coded in Xero and MYOB, and how to configure AP automation to handle the split consistently.
The components of an import-related invoice
When goods are imported into Australia, a freight forwarder or customs broker typically sends one consolidated invoice that includes several separate charges:
International freight: The cost of transporting goods from the origin country to Australia. International freight to Australia is GST-free. It should be coded to an international freight account and marked as GST-free (BAS excluded or equivalent in MYOB).
Import GST (deferred GST): GST assessed by the Australian Border Force on the customs value of the goods plus freight and insurance. This is not charged by the freight forwarder - they pay it on your behalf as a disbursement. The input tax credit is claimed on your BAS, typically in the period when goods are entered for home consumption.
Customs duty: A tariff charge assessed against the imported goods based on their customs tariff classification. Duties are not GST and are not claimed as input tax credits. They are a cost of acquiring the inventory and should be included in landed cost or coded directly to a cost of goods account.
Quarantine and inspection fees: Charges for DAFF (Department of Agriculture, Fisheries and Forestry) inspection where applicable. These are GST-free government charges and should be coded to a quarantine or import compliance expense account.
Customs broker fees: The freight forwarder’s professional fees for handling the import declaration. These are a domestic service subject to GST at 10 percent. Code to a customs brokerage or professional services account with GST.
Port charges and local cartage: Charges for moving goods from the port to the warehouse. Typically taxable at 10 percent. Code to a local freight or cartage account.
The GST matrix for import invoices
| Charge type | GST treatment | BAS line |
|---|---|---|
| International freight | GST-free | G11 |
| Import GST | Deferred GST (claim input tax credit) | G20 / 1B |
| Customs duty | No GST (not claimable) | G11 or exclude |
| Quarantine fees | GST-free government charge | G11 |
| Customs broker fees | 10% GST | G11, claim 1B |
| Local cartage | 10% GST | G11, claim 1B |
This matrix assumes Xero or MYOB BAS configuration using standard GST reporting. The specific tax codes differ between platforms but the underlying treatment is the same.
Why customs duty is not GST
This is one of the most common coding errors. Customs duty appears on the same invoice as import GST, and both are charges associated with importing. But they are structurally different:
Import GST is GST - it is a 10 percent consumption tax applied to imported goods, equivalent to the GST a domestic supplier would charge. Registered businesses can claim it back as an input tax credit.
Customs duty is a tariff - a revenue measure applied by the government on specific categories of imported goods. It is a permanent cost. It cannot be claimed as an input tax credit. It is not refundable. It increases the landed cost of the goods.
When customs duty is coded as GST, two errors occur simultaneously: the input tax credit claim is inflated (claiming back money that was not GST), and the landed cost of the goods is understated (the duty is missing from the cost calculation).
Both errors affect BAS accuracy and product margin reporting. The ATO cross-references BAS input tax credit claims against border force import records. Consistently over-claiming input tax credits on duties creates a reconciliation gap that can trigger ATO review.
How freight forwarder invoices create AP coding challenges
Freight forwarder invoices are structured for logistics, not for bookkeeping. A typical invoice lists:
International freight: AU$2,840.00 GST: nil
Import GST: AU$1,124.50
Customs duty: AU$682.00
Broker fee: AU$185.00 GST: AU$18.50
Port charges: AU$220.00 GST: AU$22.00
Total: AU$5,073.00 GST included: AU$40.50A bookkeeper looking at this invoice needs to make five separate coding decisions, apply three different GST treatments, and recognise that the AU$1,124.50 import GST is claimed separately on the BAS from the AU$40.50 GST on broker and port charges.
Processed as a single line item to “Freight and logistics expense” with “GST” selected, the coding produces:
- Incorrectly claimed GST on customs duty
- Missed input tax credit on import GST
- International freight missing the GST-free treatment
- Landed cost missing the duty component
These errors are small on individual invoices. Across 20 import shipments per month, they compound into a material BAS inaccuracy and a structural COGS understatement.
Configuring AP automation for import invoice coding
The first time a freight forwarder invoice is processed through an AP automation platform, the reviewer should code each line item manually with the correct account and GST treatment. This creates the supplier-specific coding template.
From the second invoice onwards, the AP system applies the same mapping automatically:
- International freight line items map to the international freight account, GST-free
- Import GST line items map to the deferred GST account
- Customs duty line items map to the landed cost or COGS account, no GST
- Broker fees map to the customs brokerage account, 10% GST
- Local cartage maps to the local freight account, 10% GST
When a freight forwarder changes their invoice format or introduces a new charge type, the line item description does not match the known template and is flagged as an exception. The reviewer codes it manually, and the system learns the new pattern for future invoices.
This approach handles the 80 percent of invoices that follow the established template automatically and surfaces the 20 percent with new or unusual charges for deliberate human review.
MYOB-specific considerations for import GST
MYOB AccountRight uses a “LCT/WET” tax code system for specific goods but handles import GST through the GST worksheet on the BAS. The deferred GST on imports (known as “Deferred GST” in Australian GST terminology) requires specific tax code setup in MYOB to ensure it is captured in the correct BAS field.
MYOB users processing import invoices should confirm that their deferred GST tax code is mapped to the G20 label on the BAS (or equivalent) rather than to the standard G11 purchases label. Incorrect mapping means import GST claims go to the wrong BAS line, creating reconciliation issues with ATO records.
Xero-specific considerations for import GST
Xero handles import GST through the “GST on Imports” tax rate, which should be applied to the import GST line item on the freight forwarder invoice. This rate posts to the correct BAS field for deferred import GST claims. Xero users should confirm this rate is available in their tax setup and apply it consistently rather than using the standard GST rate.
For more on how Pulsify handles automated line-item coding for import invoices, see the feature overview. The accounting integrations page covers how Pulsify connects with both Xero and MYOB to ensure correct GST treatment flows through to BAS preparation.
Sources: ATO GST on imports · Australian Border Force customs duty