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  • Tobacco excise

    Excise duty is a tax on tobacco products produced or manufactured in Australia. If you manufacture excisable tobacco:

    • you need a licence from the ATO, even if the tobacco is intended for your personal use
    • you must lodge an excise return and pay excise duty.

    Tobacco means tobacco leaf that has been subjected to any process other than curing the leaf as stripped from the plant.

    Cigarettes, cigars and loose tobacco are excisable goods if they're produced or manufactured in Australia.

    Tobacco seed, plant and leaf are not excisable goods, but you need a licence to produce or deal in them even if they are intended for personal use. You also need ATO permission to move them.

    Currently there is no tobacco manufacture occurring in Australia and no-one is licensed to grow tobacco for commercial sale or personal use. Licences to grow tobacco are subject to strict criteria and conditions and are rarely granted.

    Imported tobacco products are called 'excise equivalent goods' (EEGs). They're subject to an equivalent customs duty instead of excise duty.

    From 1 July 2019, customs duty for all tobacco products imported into Australia is paid to the Department of Home Affairs (Home Affairs) when the products arrive at the border. If you import tobacco, visit the Home Affairs websiteExternal Link for more information.

    Find out about:

    See also:

    Tobacco excise: changes from 1 July 2019

    In the 2018–19 Budget, the government announced a new measure to combat the illegal tobacco trade in Australia. The change took effect on 1 July 2019 and the changes are outlined as follows:

    From 1 July 2019:

    • Importers pay all duties and taxes to Home Affairs when tobacco products enter Australia. Licensed warehouses cannot accept tobacco products for storage unless they have been duty paid. The ATO and Home Affairs cancelled all periodic settlement permissions for tobacco products and movement permissions that allowed for tobacco products to be moved to or from licensed warehouses.
    • Warehouse operators  

    Tobacco warehouse licences expired on 30 June 2019 and were not renewed.

    Transitional arrangements

    If you were unable to pay duty for your existing underbond stock by 30 June 2019, you may have been eligible to pay the outstanding duties in instalments over 12 months to Home Affairs.

    As part of this arrangement, a financial security needed to be provided and final payment is to be made by 30 June 2020.

    Any payable GST is not included in these instalments, and was required to be paid up-front, unless a GST deferral arrangement is in place. If you have queries around your GST payable amounts then you can contact us.

    See also:

    Excise rates for tobacco

    From 1 July 2019 all customs duty for imported tobacco is paid to Home Affairs when the products arrive at the border. For more information visit the Home Affairs websiteExternal Link.

    The following rates apply to entities dealing with tobacco grown and manufactured in Australia.

    Excise rates on tobacco and tobacco products increase in March and September based on average weekly ordinary time earnings (AWOTE). In addition, excise rates for tobacco will increase by 12.5% on 1 September 2020.

    The table below lists tobacco products and the excise duty rates that apply. It is a simplified version of the Schedule to the Excise Tariff Act 1921.

    The AWOTE indexation factor for rates from 1 September 2019 is 1.018.

    Tobacco rates – Tobacco, cigars, cigarettes and snuff

    Tariff item

    Description

    Unit

    From 1/3/2019

    From 1/9/2019

    5.1

    In stick form not exceeding in weight 0.8 grams per stick actual tobacco content

    $ per stick

    0.81775

    0.93653

    5.5

    Either:

    1. not in stick form; or
    2. in stick form exceeding in weight 0.8 grams per stick actual tobacco content

     

    $ per kg of tobacco content

    1090.33

    1291.77

    5.8

    Blended tobacco goods

     

    The amount of duty worked out under section 6AAC

    The amount of duty worked out under section 6AAC

    Note:

    • The sale of snuff is banned in Australia.
    • Excise rates on roll-your-own tobacco and other tobacco products will be adjusted annually for four years to align with the excise rates for manufactured cigarettes, from 1 September 2017.

    Applying for an excise licence: tobacco

    You must hold an appropriate excise licence from the ATO to:

    • manufacture excisable tobacco products
    • produce or deal in tobacco seed, plant and leaf.

    If you apply for a licence, there are many factors we consider in assessing your application, including:

    • physical security of the premises
    • protection of the revenue
    • whether there is a market for the goods.

    There are no application or renewal fees for excise licences. We may ask you to lodge a financial security to ensure that excise revenue is protected.

    Manufacturer licence

    A manufacturer licence for tobacco authorises you to:

    • manufacture or produce the excisable tobacco goods specified in the licence
    • store goods that will be used in the manufacture or production of the excisable tobacco goods.

    Next steps:

    Growing tobacco for personal or commercial use

    It's illegal to grow tobacco in Australia for personal or commercial use without an excise licence. Licences to grow tobacco are subject to strict rules and conditions and are rarely granted. No licences will be granted to grow tobacco for personal use. There are serious consequences if you do not comply with these rules and conditions.

    All tobacco grown (whether for personal or commercial use) and consumed in Australia is subject to excise duty and the legislated requirements under the Excise Act 1901.

    If you still wish to apply for a licence to grow tobacco you need to contact us.

    Last modified: 15 Aug 2019QC 47693