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  • Tobacco Stakeholder Group minutes 8 April 2016

    Meeting details

    Venue: ATO Office, 52 Goulburn Street, Sydney

    Date: 28 April 2016

    Start: 2.00pm Finish: 4.00pm

    Chair: Tom Wheeler

    Secretariat: Rowena Troth

    Contact Phone: (02) 4923 1444


    Tom Wheeler


    Peter Vujanic


    Michael O'Rourke


    Elinor Kasapidis


    Andreas Gianello


    Bryce Conolan

    Department of Immigration and Border Protection (DIBP)

    Supt Bjorn Roberts

    Australian Border Force (ABF)

    Neville Matthew

    Australian Competition and Consumer Commission (ACCC)

    Gary Dickson

    Imperial Tobacco Australia

    Richard Vantuno

    Imperial Tobacco Australia

    Josh Fett

    British American Tobacco Australia Ltd (BATA)

    Saminda Fernando

    British American Tobacco Australia Ltd (BATA)

    Mark Powell

    Philip Morris Limited

    Michael Ritter-Leva

    Philip Morris Limited

    Murray Cranston

    Philip Morris Limited

    Rowena Troth

    ATO - Secretariat

    Guest attendee  

    Sean McGill

    KPMG (Agenda Item 3)


    Danni Bouris

    Imperial Tobacco Australia

    Patrick Muttart

    Philip Morris Limited

    Sasha Billett

    Department of Immigration and Border Protection

    Discussion summary


    The Tobacco Stakeholder Group agendas, minutes and related papers are not binding on the ATO, DIBP 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 12 November 2015 had been finalised and published on the TSG website. There were no action items outstanding. The Chair called for any conflicts of interest to be declared. No conflicts of interest were declared by members.

    Agenda item 2 – Agency updates

    Australian Taxation Office (ATO) – outcomes

    Reinventing the ATO update –Tom Wheeler

    Members noted the update provided by Tom Wheeler. Tom made reference to various initiatives detailing key achievements in improving the client experience for excise payers for 2015–16. Reference was also made to various ATO-wide initiatives including myGov (the whole of Commonwealth Government portal), the new mytax, and services and tools provided in the ATO app.

    Excise and excise equivalent goods modernisation update – Michael O'Rourke 

    Michael advised members of the work that was progressing in this area in response to feedback by industry on key irritants and deregulation opportunities by the ATO and DIBP jointly.

    Tax gap update – Elinor Kasapidis

    Elinor provided an update on work being carried out to determine a tax gap for tobacco. The University of Queensland (UQ) is currently working on one approach using waste water analysis. UQ have advised that they are gathering data on current readings and results, and that their analysis will not be available until 2017. UQ have emphasised that at this stage, the analysis is experimental and will require further refining to give a high level of confidence.

    DIBP and the ATO are working closely on another approach using operational data. The estimated tobacco tax gap from that approach is likely to be published in the ATO Annual Report in October, along with other tax gap figures, subject to the views of experts and tax gap consultants as to the reliability and credibility of the information. The waste water analysis may provide more evidence to the figures when considered in the 2017 estimate.

    Tax crime update 2 – Peter Vujanic

    Members noted the update provided by Peter, including the roles and responsibilities across the ATO. Peter's area of Criminal Law and Prosecutions has responsibility for addressing domestically grown illicit tobacco, with Tom Wheeler responsible for the tobacco product risk and DIBP responsible for any illicit tobacco crossing the border. Peter made reference to the recent Parliamentary Inquiry into Illicit tobacco. John Ford and Tom Wheeler represented the ATO at that hearing. At this time, it was stated that the domestic growing of illicit tobacco was small. Peter provided an update of four ATO investigations over the last two months on illicit tobacco. The ATO is working closely with the Australian Border Force (ABF) and the Australian Federal Police (AFP) on these investigations, as well as State Police forces.

    Mark Powell queried the provision of intel regarding illicit trade, particularly around broader long term trading patterns. Peter advised that members can provide information directly to the ATO at any time. The ATO will continue working closely with other agencies to share information.

    Excise Equivalent Goods (EEG) Guidelines – Michael O'Rourke 

    Michael advised members that as a result of several inquiries from warehouse operators and owners of product stored in EEG warehouses, the ATO was revisiting a former Customs warehousing manual (known as Volume 10). The ATO is keen to hear from industry on their needs for EEG guidance and if there are any particular focus areas.

    Action item 28042016-2-1 – Members to advise the ATO if they have suggestions for guidance that would assist the industry.

    ATO review of tobacco licences – Andreas Gianello

    Andreas provided members with the background of a review recently carried out by the ATO of warehouse operators with tobacco storage licences. The review focused on the licence conditions and associated issues. The ATO administers licensing of excise equivalent goods on behalf of DIBP. The review identified that some warehouses did not have adequate insurance coverage for duty equivalent (in event of theft). Others no longer required such storage for tobacco products. The review led to updating of insurance coverage; and raised awareness of licence conditions. 25 licences were surrendered, and a number of licensees were advised that conditions would be placed on their licences to impose an upper limit on the amount of tobacco that can be stored and to ensure that insurance coverage was adequate. The holding of securities by the ATO was also reviewed as part of this process.

    Department of Immigration and Border Protection (DIBP) – outcomes

    Duty Drawback update – Bryce Conolan

    The Department is still considering this issue. A meeting was held in February 2015 to discuss with the Treasury and ATO. Further information was requested by Treasury. The DIBP have prepared a discussion paper which is currently with Treasury for consideration. Where duty refunds relate to excise, it impacts on three commodities. If this were extended to customs commodities, some 14,000 commodities could be impacted and DIBP are seeking Treasury advice on this issue.

    Tobacco Reform Programme update – Bryce Conolan
    (including Illicit Trade Interdepartmental Committee)

    Bryce provided an update on the program, advising that the ABF Commissioner had established further governance oversight of tobacco reform. There are now three groups that have been formed with responsibility for tobacco reform:

    1. An internal DIBP / ABF group at SES Band 2 level'
    2. The Interdepartmental Committee (IDC) on Illicit Tobacco - most recently met in February.
    3. The Industry Advisory Group (IAG) on Illicit Tobacco - most recently met in February.

    The IAG, whose members include TSG industry members, was provided with formal updates on activity from the IDC, with work progressing on all issues.

    Illicit Trade Enforcement update - Bjorn Roberts 

    Over the past six months, there have been significant achievements in the Government's response on illicit tobacco. The Strike Team were established by the Minister's announcement on 15 October 2015. The team have received around 200 referrals from industry, other government agencies, state and territory police agencies. The ABF have seized 13 tonnes of tobacco and 50 million cigarettes, as well as $2.5m in cash and proceeds since October 2015.

    The World Customs Organisation has also identified illicit tobacco as an issue and are encouraging members to take action. A global operation had been carried out recently with results yet to be provided.

    The ABF will be participating in a border agencies regional conference on illicit tobacco being held in Singapore in May 2016, which will include a capability building workshop. Bjorn noted that Australia is potentially the most impacted country within our region.

    Industry commented favourably on the working relationship between the ABF and ATO which is resulting in stronger enforcement outcomes.

    Agenda item 3 - Industry items

    KPMG report on Illicit Tobacco in Australia

    Sean McGill provided members with an overview of the report's methodology and recent findings, under embargo, ahead of its' public release. He noted that 281 neighbourhoods were included in the empty packet survey, with tourist areas and sporting arenas excluded from the selection due to potential impact on comparisons between each report.

    Sean commented that these reports are generally receiving a more positive reaction as those people using the information are becoming more familiar with the methodology. To improve the methodology, KPMG were open to any comments or suggestions relating to the report.

    Committee members did not endorse the report, but noted the update provided.

    Action item 28042016-3-1 – Josh Fett to discuss with Peter Vujanic about how sites are selected for covert buys.

    Action item 28042016-3-2 – Gary Dickson to discuss a current prosecution matter with Peter Vujanic out of session.

    Agenda item 4 - Other business

    Tom Wheeler advised members that he will be discussing with DIBP, the current number of committees providing governance across agencies around tobacco issues. This is to ascertain how the various committees work together and whether there is any duplication. He invited TSG members to provide any feedback on this forum as to whether the group provided meaningful interaction.

    Action Item 28042016-4-1 – Members to provide feedback on the Tobacco Stakeholder Group and its value to the Chair.

    There was no other business.

    The meeting concluded at 4.00pm.

      Last modified: 13 Jul 2016QC 49630