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  • Tobacco Stakeholder Group minutes 16 April 2015

    Meeting details

    Venue: ATO Office, 52 Goulburn Street, Sydney

    Date: 16 April 2015

    Start: 10.00am Finish: 12.30pm

    Chair: Tom Wheeler

    Secretariat: Rowena Troth

    Contact Phone: (02) 4923 1444


    Tom Wheeler


    Andrew McIver


    Peter Vujanic


    Antoine Tannous


    Matthew O'Connor


    Bryce Conolan


    Anne Alexander


    Celeste Flannery


    Neville Matthew


    Barry Wilson

    British American Tobacco Australia Ltd (BATA)

    Mariam Chizari

    British American Tobacco Australia Ltd (BATA)

    Gary Dickson

    Imperial Tobacco Australia

    Rodney Kretchmer

    Philip Morris Limited

    Mark Powell

    Philip Morris Limited

    Michael Ritter-Leva

    Philip Morris Limited

    Guest attendee

    Sean McGill

    KPMG (Agenda Item 4)


    Errol McMahon

    Imperial Tobacco Australia

    Chris Argent

    Philip Morris Limited

    Lachlan Beaton

    British American Tobacco Australia Ltd

    Michelle Worsley

    Imperial Tobacco Australia

    Anthony Millgate

    Department of Health

    Lloyd Weedall

    Department of Health

    Sasha Billett


    Discussion summary


    The Tobacco Stakeholder Group agendas, minutes and related papers are not binding on the ATO, ACBPS or the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    Agenda item 1 – Welcome

    Introductions, review of action items and previous minutes.

    Outcome: The minutes of the previous meeting of 23 October 2014 were endorsed, and there were no action items outstanding. No conflicts of interest were declared by members.

    Agenda item 2 – TSG Statement of Intent

    Outcome: Members acknowledge that the purpose of the group is not to deal with policy issues. A suggestion was made to consider including a reference to Article 5.3 of the WHO Framework Convention on Tobacco Control. The Group also discussed consideration of broadening the group to include representatives from smaller stakeholders in the industry. It was noted that minutes are published on the website for transparency and access.

    Action: 16042015-2-1 – Chair to consider membership of TSG and finalise TSG Statement of Intent. 

    Agenda item 3 – Agency updates

    ATO and ACBPS

    Update on ATO compliance activities – ATO

    Members noted information provided by Antoine Tannous about compliance activities carried out by the ATO.

    Four evidential briefs of evidence have now been referred to the CDPP (Operation Garnet) concerning the major seizure in 2014 in Victoria.

    On 22 September 2014, a jury returned a verdict and found defendant guilty on two counts contrary to s117C Excise Act 1901. On 27 March 2015, the defendant was sentenced to a term of imprisonment of one year (count 1), 18 months (count 2) from 27 March 2015, but was released forthwith upon entering into a recognisance ($1000) to be of good behaviour for 12 months.

    An ATO media release was issued on 31 March 2015 relating to the seizure of 27 tonnes of tobacco. This was a referral from NSW Police when a truck was discovered to be carrying tobacco leaves. The person was sentenced to 9 months imprisonment.

    As a result of warrants issued under Operation Santiago, a person has been charged with three offences under the Excise Act 1901 (for possessing, producing and manufacturing). This matter was adjourned for mention on 29 May 2015 in the Melbourne Magistrates Court. The original ATO media release relating to this was issued on 4 May 2014.

    Biannual actions are being planned of covert buys through shops / markets. Peter Vujanic provided information about a recently discovered crop of tobacco in regional Victoria that was destroyed and action taken by law enforcement.

    Update on March tobacco duty increase – ATO

    Andrew McIver advised that no quotas were set for the last rate increase on 1 March 2015. Andrew explained how quotas work:

    • The quota process commences with the ATO declaring a period.
    • A base period is set at the same time a period is declared. The base period is reflective of normal clearances for the industry taken as a whole.
    • Declaring a period is the trigger that allows the ATO to issue quota orders.
    • If considered appropriate the ATO can selectively issue quota orders to specific entities (ie not all entities will necessarily receive them).

    Andrew explained that the ATO can retrospectively set quotas if excessive clearances within the declared period are observed. Quota orders can be issued either during the declared period or after the declared period has ended.

    While typically the 1st of March and September, members also noted that the date of effect of the rate of indexation can be affected by the release date of AWOTE figures, ie there must be a 5 day period from the date of release of the AWOTE figure and indexation rate taking effect. AWOTE release dates can be found on the website.

    Members noted that the ATO will liaise with industry around June, regarding expected clearance trends in the lead up to the next rate indexation in September.

    Update regarding Modernising the excise system – ATO

    Tom Wheeler provided an update on the work being done to streamline excise and excise equivalent goods systems. The ATO are progressing ideas and have been working with the ACBPS, focusing on the natural systems of business and deregulation opportunities.

    Reinventing the ATO

    Tom Wheeler provided commentary around the Reinventing the ATO Blueprint Summary that was provided with meeting papers. The ATO have recently released a Culture Strategy and Leadership Strategy for the agency. The ATO is looking to provide a contemporary service and make it easier for clients to comply and taking the client experience into account when designing systems etc. It was noted the Commissioner has also assured the community that this does not mean that those who don't comply will not be dealt with.

    Update on merger of ACBPS / Department of Immigration - ACBPS

    Members noted that the two organisations are being merged into one organisation - the Department of Immigration and Border Protection. The Australian Border Force will be part of the Department and will deal with all operational issues relating to the border. The Department will be responsible for all policy issues. Representation at this meeting is still being finalised with the changes to have a representative from the investigations area in attendance. Analysis regarding seizure data is carried out at the end of the financial year.

    Agenda item 4 – Industry items

    KPMG Report on Illicit Tobacco in Australia April 2015 

    Sean McGill provided an overview of the soon to be released updated KPMG Report for 2014, explaining how the statistics were obtained. The survey was carried out in October / November 2014.

    Industry assistance 

    Members discussed various equipment used in the processing of illicit tobacco. Instances of "pop-up" shops and the cost for councils to prosecute these offences were also discussed. Barry Wilson advised that a report analysing issues and identifying key trends over the last 12 months is being put together and he will distribute to members once the report is finalised. He also advised that BATA have provided their tobacco testing machinery to the National Measurement Institute for their use. Other industry actions were also discussed, including surveillance of growing regions and use of tobacco dogs.

    Customs duty drawback 

    Bryce Conolan advised that work is progressing in this area. It is part of a reform program, with Phase 1 currently with the ACBPS Executive for approval prior to it going to Government. Drawback and refund is part of Phase 2 and a timeline is currently being prepared for that phase. Industry were invited to discuss further with the Assistant Secretary at ACBPS if they wished.

    Agenda item 5 – Other business

    Update on regulations 

    Customs Regulation 2015 and Excise Regulation 2015 – Tom Wheeler noted the recent changes to the Excise and Customs Regulations.

    Illicit Tobacco Protocol 

    Industry requested an update of the protocol be provided out of session

    Action: 16042015-5-1 – Department of Health to provide an update on the Illicit Tobacco Protocol to TSG members out of session. 

    There was no other business.

    The meeting closed at 12.30pm.

      Last modified: 10 Jul 2015QC 46260