Rules of Origin

To qualify for zero tariffs when exporting to Australia, you will need to prove that your goods originate in the UK.

The UK-Australia trade agreement will remove tariffs on all UK goods, making it easier for businesses to sell to Australia. To qualify for zero tariffs, you will need to prove that your goods originate in the UK.

Origin criteria

A good shall be regarded as originating if it is:

  • wholly obtained or produced in the territory of the UK, Australia, or both countries. Generally, wholly obtained or produced goods refer to agricultural goods and natural resources;  
  • produced entirely in the territory of the UK, Australia or both countries, exclusively from originating materials; or  
  • produced entirely in the territory of the UK, Australia or both countries using “non-originating materials” – from outside the UK and Australia – provided the good satisfies the applicable requirements of the Product-Specific Rules of the agreement, explained below.

Product-specific rules

Make sure you check the Product-Specific Rules of the UK-Australia Free Trade Agreement to understand how your product can qualify as originating from the UK and qualify for zero tariffs.

Different goods will have their own product-specific rules which allow a good containing third country materials and inputs to count as originating, but only if those materials or inputs have undergone certain changes.

For many product-specific rules, the FTA gives businesses the choice of more than one way to prove that their product is originating.

Once a good qualifies for originating status, it is considered 100% originating. This means that if that good is then used in the production of another product, its full value is considered originating, and no account is taken of any non-originating materials used within it towards the new product.

For example, if a UK-manufactured engine contains 30% of non-originating materials but qualifies as originating from the UK under the Product-Specific Rules, the entire engine can be counted towards the car’s originating content; the company producing the car does not have to consider the non-originating materials in the engine.

If a UK business uses originating materials from Australia to produce a good, those materials count towards the originating material in that good when exported to Australia.

Examples of product specific rules

Regional Value Content (RVC)

Products with a Regional Value Content (RVC) rule allow for the incorporation of materials and inputs from countries other than the UK and Australia – non-originating materials – up to a certain percentage of the total value of the good.

Example

One of the specific rules for 8531.10 (“Burglar or fire alarms and similar apparatus”) under the Product-Specific Rules of the UK-Australia trade agreement is “RVC40”. The RVC value can be reached with two methods.

If using the build-down method, at least 40% of the value of the product needs to be added in the UK or Australia for that product to qualify as originating.

If using the build-up method, materials originating from the UK or Australia need to make up at least 40% of the final value of the product for it to qualify as originating.

The way that RVC rules are calculated can vary across different trade agreements. Make sure you review the UK-Australia FTA to correctly calculate the value of originating content or originating materials in your product so it qualifies for zero tariffs once exported to Australia.

Change of tariff classification rules

Some product-specific rules allow for a final product to count as originating if the non-originating materials/inputs were processed in the UK and the final product is a different classification to the non-originating inputs (change in HS code). These rules are called changes in tariff classification – where a good moves from one commodity code to another, as a result of processing.

There are three levels of change in tariff classification, which explain the degree to which non-originating materials must have been changed in order for the final product to count as originating: Change in Chapter rules, Change in Tariff Heading rules and Change in Tariff Subheading rules.

CC – Change in Chapter

All non-originating materials used in the production of a product must have undergone working sufficient to change the first two digits (or “Chapter”) of their HS code before the product can qualify for zero tariffs.

Example

The specific rule for 2009.50 (“Tomato juice”) under the Product-Specific Rules of the UK-Australia trade agreement is “CC”. A UK business is selling tomato juice to Australia. The business imports tomatoes (classified under HS Code 0702.00) from Morocco, which would count as non-originating under the UK-Australia trade agreement. However, by processing these tomatoes in the UK, the final product is classified under a different chapter – 2009.50 – meaning the business can export the tomato juice to Australia as originating from the UK and qualify for zero tariffs.

CTH – Change in Tariff Heading

All non-originating materials used in the production of a product must have undergone working sufficient to change any of the first four digits (or “Tariff Heading”) of their HS code before the product can qualify for zero tariffs.

Example

The specific rule for HS code 1806.10 (“Cocoa powder, containing added sugar or other sweetening matter”) under the Product-Specific Rules of the UK-Australia trade agreement is “CTH”. A UK business is selling cocoa powder with added sugar to Australia. The business imports cocoa beans (classified under HS Code 1801.00) from Ecuador, which would count as non-originating under the UK-Australia trade agreement. However, by processing these beans in the UK, the final product is classified under a different tariff heading – 1806.10 – meaning the business can export the cocoa powder to Australia as originating from the UK and qualify for zero tariffs.

CTSH – Change in Tariff Subheading

All non-originating materials used in the production of that product must have undergone working sufficient to change any of the six digits (or “Tariff Subheading”) of their HS code before the product can qualify for zero tariffs.

Example

One of the specific rules for HS code 8516.72 (“Other electro-thermic appliances: toasters”) under the Product-Specific Rules of the UK-Australia trade agreement is “CTSH”. A UK business is selling toasters to Australia. The business imports parts (classified under HS Code 8516.90) from the European Union, which would count as non-originating under the UK-Australia trade agreement. However, by using the parts in manufacturing taking place in the UK, the final product is classified under a different tariff subheading – 8516.72 – meaning the business can export the toaster to Australia as originating from the UK and qualify for zero tariffs.

Specific processing rules

Some product-specific rules in the UK-Australia trade agreement require non-originating materials to undergo specific types of processing before the product into which they are incorporated can qualify for zero tariffs when sold to Australia. These include certain types of textiles, fabric and chemicals – classified under Chapters 50 through to 63 and Chapters 27 through to 40 respectively of the Product-Specific Rules of the agreement.

Rules on the processing of fabric are indicated as “FF” under the Product-Specific Rules.

Businesses working in the chemical or allied industries should familiarise themselves with the notes in Section VI of the Product-Specific Rules to ensure they understand how to meet the requirements for declaring origin.

Tolerance

There are certain tolerances available under the UK-Australia trade agreement, whereby a product containing non-originating materials that does not satisfy its change in tariff classification requirements set out in the Product-Specific Rules can still qualify for zero tariffs as originating from the UK if the following criteria are met:

For chapters 1-24, 50-63:

  • The weight of non-originating materials does not exceed 10% of the weight of the good, excluding packaging; or
  • The value of non-originating materials does not exceed 10% of the value of the good.

For chapters 25-49, 64-97:

  • The value of non-originating materials does not exceed 10% of the value of the good.

These tolerances only apply to change of tariff classification rules under these specific chapters. Where an RVC rule also applies, you cannot use the tolerance to reduce the required percentage threshold of originating materials/content in your product. For example, you cannot use the tolerance to reduce a RVC40 requirement to RVC30.

How to declare 

Claiming for preferential tariff treatment 

An importer of goods into Australia may make a claim for preferential tariff treatment based on a proof of origin – either a declaration of origin or importers' knowledge.  

The declaration of origin may be completed by the UK exporter or producer and must fulfil the minimum data elements specified in Annex 4A. By completing the declaration, the exporter or producer is declaring that the good is originating and they possess evidence to demonstrate this.  

If an exporter or producer provides a declaration of origin, they should keep it and any records demonstrating the good’s originating status. All records can be kept in any medium, including electronic, provided they allow for prompt retrieval.

Importers' knowledge may be used by the importer in Australia, removing the need for a declaration of origin, provided that the importer is in possession of documentation demonstrating the good’s originating status at the time the claim is made.

For details on the requirements for both proofs of origin, please refer to the UK-Australia trade agreement.

Waiver of origin declaration 

The requirement for relying on a proof of origin is waived for low value shipments.

In the UK, a proof of origin is not required if the customs value of the imported good does not exceed 1,000 Pound Sterling. The UK-Australia agreement specifies in Article 4.21 that imported goods in Australia do not require a declaration of origin if their customs value does not exceed 1,000 Australian Dollars, or any higher amount established by Australia.

Shipping your product 

Your products with UK origin will remain eligible for zero tariffs if they are transported straight to Australia without passing through another country. 

Goods transported through other countries, including via freeports, en route to Australia or the UK shall still be considered originating provided that the good:

a) does not undergo further production or operation, other than unloading, reloading, separation from a bulk shipment or splitting of a consignment, storing, repacking, labelling or marking required, or any other operation necessary to preserve it in good condition to transport the good, and

b) is not released to free circulation.

‘Free circulation’ means that the good has cleared customs, applicable duties have been paid, and the good is available for use in a domestic market.

The customs authority of the importing Party may request that the importer provides evidence of compliance with the requirements set out above. This evidence may include, but is not limited to, the following:

  • a certificate (known as a certificate of non-manipulation) issued by the customs authorities of the country of transit:

i) giving an exact description of the goods;

ii) stating the dates of unloading and reloading of the goods and, where applicable, the names of the ships, or the other means of transport used; and

iii) certifying the conditions under which the goods remained in the transit country;

  • contractual transport documents such as bills of lading
  • factual or concrete evidence based on the marking or numbering of packages;
  • any evidence relating to the good itself; and
  • any substantiating documents to the satisfaction of the customs authorities of the importing country

For more information on maintaining your product’s originating status in transit, businesses should consult the UK-Australia trade agreement.

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