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  • Tobacco tax gap

    This information is about how we estimate the tax gap for tobacco duty. This gap forms a part of our overall tax performance program.

    The tobacco duty population is defined as businesses that deliver tobacco (cigarettes, cigars and loose tobacco) into the Australian domestic market.

    All tobacco and tobacco products that are imported into Australia are subject to tobacco duty. Broadly this duty is calculated on a per-stick basis for cigarettes and a per-kilogram rate for loose tobacco and other tobacco leaf products.

    Since 2015 when regulated domestic manufacturing ceased, Australia has imported all of its legal tobacco products. There are no licensed growers or manufacturers of tobacco (including tobacco intended for personal use) in Australia as no licences have been issued since 2006.

    Tobacco duty collection is jointly administered by the ATO and the Australian Border Force (ABF), which sits within the Department of Home Affairs (Home Affairs). Our analysis reflects the involvement of both agencies in managing the risk of illicit tobacco in Australia.

    For 2019–20, we estimate the net tobacco duty tax gap to be 6.2% or $909 million. In other words, we estimate that almost 94%, or $13,824 million of the total theoretical tobacco duty was paid in 2019–20.

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      Last modified: 19 Oct 2021QC 55324