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  • 8. Department of Home Affairs

    The Home Affairs portfolio, including the Australian Border Force (ABF), is responsible for the collection of customs duty and other indirect taxes including GST, Luxury Car Tax (LCT) and Wine Equalisation Tax (WET) at the Australian border. Home Affairs also administers the deferral of GST on imported goods for registered importers under the GST Deferral Scheme.

    The ABF advances a prosperous and secure Australia through trade and travel modernisation, effective customs, immigration, maritime and enforcement activities across the border continuum. The focus of the ATO and Home Affairs/ABF during the past financial year has been to support the Australian Government’s efforts to drive a successful social and economic recovery from COVID-19.

    Highlights for 2020–21 include:

    • $4.8 billion GST collected and $28.8 billion deferred GST on imported goods – representing a total GST liability assessed of $33.6 billion
    • 4.3 million import declarations and self-assessed clearance declarations cleared
    • 1.3 million export declarations cleared
    • 50,028 Tourist Refund Scheme (TRS) claims, of which 98.3% were approved, resulting in claims paid of $21.2 million of GST and WET to travellers.

    Compliance program

    The ABF compliance program performs a crucial role in managing the movement of goods across Australia’s border, balancing the needs of facilitating legitimate trade while protecting Australia’s border security. Through a strategy and intelligence-led approach, the ABF focuses its capability into operational and tactical responsibilities. This includes customs-related legislation, regulatory frameworks, compliance settings, industry engagement and border modernisation.

    Compliance activities are conducted on imported goods to ensure that applicable customs duties and indirect tax liabilities are collected. This is achieved using risk profiling, monitoring past trading behaviours, intelligence assessments and referrals from industry. The ATO and the ABF work collaboratively on revenue compliance measures, information sharing, risk assessments on licensed entities and traders, sharing data and maintaining joint operational plans.

    The ABF has a range of compliance and enforcement tools including the ability to warn, infringe, or prosecute offenders. This can include issuing penalties under the Infringement Notice Scheme or applying other sanctions such as prosecution for importers suspected of fraudulent activities. During 2020–21, a total of $145.6 million in GST understatements were identified through compliance activities.

    Figure 13: GST understatements

    GST understatements for the last five financial years.
2016–17 $54.3m, 2017–18 $31.1m, 2018–19 $91.5m, 2019–20 $109.6m, 2020–21 $145.6m.
GST understatements increased by 33% in 2020–21 compared with 2019–20. The higher result can be attributed to both GST understatements for post transaction verification and voluntary disclosures.

    In 2020–21, there was:

    • $74 million in voluntary disclosures – voluntary disclosures fluctuate in the number and value from year to year
    • $57 million in post transaction verification – mainly due to a single investigation in September 2020 where confectionery was incorrectly claimed as food (which is GST exempt), resulting in $37 million in GST understatements.

    The ABF continues to engage with industry to enhance compliant behaviour through forums such as the Trade and Goods Compliance Advisory Group. This is a collaborative forum for industry that Home Affairs and the ABF use to recommend solutions to trade and goods compliance issues.

    The detection and stopping of illicit goods coming into Australia has continued during the pandemic. The ABF continues to stop illegal imports and target the black economy and criminal syndicates taking advantage of COVID-19 to circumvent border controls.

    Tourist Refund Scheme

    The Traveller Revenue section, formally the Tourist Refund Office (TRO), manages and supports the TRS and administers and supports the TRS Integrity Analysis Programme.

    The work includes:

    • reviewing, finalising and analysing complex TRS claims
    • providing TRS policy support and advice
    • reviewing and investigating TRS fraud allegations.

    COVID-19 continues to have a profound effect on international travel. Only 50,028 claims were processed in 2020–21, resulting in $21.2 million in claims paid to travellers. By comparison, 766,000 were processed in 2019–20 and $197.6 million was paid to travellers, as only part of the year was impacted by travel restrictions. There has been a reduction in total claims of approximately 95% when compared to results prior to COVID-19 (2018–19).

    In 2020–21, ABF rejected 1.7% of applications, worth $0.3 million, compared to 2019–20, when the ABF rejected 1.6% of claims, worth $1.8 million. Amounts recovered in 2020–21 by the ATO from claims referred by the TRO were $252,000, with $91,000 in penalties applied.

    Due to low traveller numbers, the ABF has redirected resources to high-priority projects to establish a safe reopening of the Australia’s international border. TRS staff have been assisting with cargo and mail compliance, providing direct benefit to GST-related activities.

    Australian National Audit Office recommendations

    The ABF continues to work with the ATO to implement the recommendations in the 2018–19 ANAO audit of the TRS. The objective of the audit was to examine and assess whether the TRS was being effectively administered, with appropriate risk management.

    Two of the three recommendations have now been finalised.

    • The ATO and Home Affairs to improve their TRS risk management by jointly risk assessing the TRS, to identify all risks and appropriate treatments, and review the assessment annually – Finalised prior to 2020–21 with the completion of a joint risk assessment.
    • The ATO and Home Affairs implement and embed the developed data analysis tools into business practices – The system has been enhanced to enable verification of an ABN on an invoice against the ABR. The ABN lookup capability within the TRS system continues to function as purposed. The GST registration status of retailers is viewed in real time ensuring GST TRS refunds are not paid to entities that are not registered for GST. The Home Affairs Chief Audit Executive endorsed the closure of this recommendation in 2020–21.
    • Quantify revenue leakage attributed to Australians returning goods for which a TRS refund was received – is still to be finalised.

    As traveller numbers increase, the ABF will continue to work with the ATO to implement this recommendation. This has been delayed due to COVID-19 travel restrictions and low passenger numbers. Projects to measure compliance and revenue leakage can only be considered when traveller numbers return to a level required to enable accurate analysis.

      Last modified: 07 Feb 2022QC 67817