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  • Excise on tobacco

    If you produce or manufacture cigarettes, cigars and loose tobacco in Australia they are excisable tobacco goods (subject to excise duty). However, currently there's no legal tobacco manufacture occurring in Australia.

    Tobacco seed, plant and leaf are not excisable goods, but you need a licence from us to produce (grow) or deal in them even if you intend to use them for personal use. You also need our permission to move them. Currently, no one is licensed to grow tobacco seed, plant or leaf for commercial sale or personal use. The licences are subject to strict criteria and conditions and are rarely granted.

    Imported tobacco products are subject to customs duty rather than excise duty. These products are a type of excise equivalent good (EEG).

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    Excise duty

    Excise duty is a commodity-based tax on:

    If you produce, store or manufacture these excisable goods in Australia, you:

    • need to have an excise licence
    • may need to pay excise duty.

    You need permission from us before you move underbond (duty unpaid) excisable goods between licensed premises or to a place of export.

    Manufacturing excisable tobacco

    Currently there's no legal tobacco manufacture occurring in Australia. To manufacture excisable tobacco:

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

    Excise equivalent goods – imported tobacco

    Excise equivalent goods (EEGs) are alcohol, tobacco, or fuel and petroleum products a person or business imports into Australia. Instead of paying excise duty on EEGs, you generally pay an equivalent customs duty.

    From 1 July 2019, changes occurred to help combat the illegal tobacco trade in Australia. For example, the taxing point for when you have to pay customs duty has changed. Now if you import tobacco into Australia you have to pay all customs duty and taxes to the Department of Home Affairs (Home Affairs) when the goods arrive at the Australian border.

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    Changes for tobacco excise from 1 July 2019

    If you are granted an excise licence to legally manufacture excisable tobacco goods in Australia, you would need to pay excise duty, weekly, for all excisable tobacco manufacture completed within that week period. There is currently no licensed legal commercial tobacco manufacturing occurring in Australia.

    The Illicit Tobacco Taskforce

    Engaging in the illicit tobacco trade significantly deprives the community of taxes that are required to fund essential community services. Estimates reveal that for the 2017–18 financial year, illicit tobacco cost the Australian community approximately $647 million in lost revenue. This equates to 5% of the amount of collectable tobacco duty revenue (excise and customs duties).

    Illicit tobacco trade includes but is not limited to:

    • the unlicensed production of tobacco plant or leaf
    • the unlicensed manufacture of tobacco goods.

    Illicit tobacco may include cigarettes, cigars, loose tobacco, and tobacco leaf and plant matter. Tobacco is illicit when it is:

    • grown, manufactured and/or produced in Australia without an appropriate excise licence, even if the tobacco is intended for personal use, or
    • imported into the domestic market without customs duty being paid.

    The Illicit Tobacco Taskforce (ITTF) is a partnership between the ATO and other government agencies. It was formed to enhance our ability to protect Commonwealth revenue, by proactively targeting, disrupting and dismantling serious organised crime syndicates that deal in illicit tobacco.

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    Last modified: 15 Sep 2020QC 63515