Excise guidelines for duty free shops

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Chapter 6 - Making duty free sales: outwards

Purpose

This chapter deals with:

• making outwards duty free sales
• conditions travellers must be made aware of
• what happens when goods are not exported
• exporting liquid, aerosol and gels duty free goods, and
• penalties that can apply to offences in relation to duty free shops.

6.1 Introduction

In general terms, outwards duty free shops will not pay duty. However, excise duty will be payable when excisable goods are not taken overseas or are unable to be accounted for (for example, stock shortages).

This chapter focuses on the rules that you need to follow when making duty free sales from an outwards duty free shop.

6.2 Policy and practice

6.2.1 Outwards duty free shops - off-airport

Off-airport outward duty free shops are usually located away from the airport. However, they could also be physically located at an airport, before the Customs processing point.

You are not permitted to sell or deliver duty free goods unless the purchaser is a 'relevant traveller' able to show you a ticket or other approved document showing an international flight or voyage. ^[89]

You must follow specific procedures in the invoicing, packaging and sealing of goods. Sales made from outwards off-airport duty free shops must use the sealed bag method of delivery.

The number or other identification of the traveller's ticket, or similar approved travel documentation, must be recorded on the sales invoice.

You must not deliver the goods to the traveller earlier than 60 days before the traveller is due to depart. [90]

Sales to 'relevant travellers

Sealing goods

You must enclose goods purchased by a 'relevant traveller' in a package: ^[91]

• sealed so that the goods cannot be removed without the seal being broken
• with a copy of the sales invoice, and
• if that package is of a size that will be carried as hand baggage in the cabin of the aircraft or ship the package must be transparent enough for the goods to be easily identifiable.

Invoice preparation

When you deliver goods from your shop for export by a relevant traveller you must prepare, in triplicate, an invoice, being one of a series of sequentially numbered invoices, specifying ^[92] :

• name and usual residential address of the relevant traveller
• the following particulars of the intended relevant flight or voyage
  • date of departure
  • airport or wharf of departure
  • in the case of a relevant flight - flight number or other designation of the flight
  • in the case of a relevant voyage - name of the ship and the number or other destination of the voyage
  • number or other identification of the traveller's ticket or similar approved travel document
• a precise description of the goods, including
  • quantity, in figures, of each item of the goods
  • the total number, in words, of items on the invoice
  • the sale value, in figures, of each item or quantity of items, and
  • the total sales value of those items and quantities of items.

You must prepare the invoices in a way that would make it impracticable to add other items to the description. For hand prepared invoices, a line should be drawn from the last item to the far right of the page and then diagonally to the bottom left hand corner and then across the page to the bottom right hand column.

Distribution of invoices

You must ^[93] :

• place one copy of the sales invoice inside the tamper-proof sealed package with the goods
• securely attach a second copy of the sales invoice to the outside of the package in a waterproof envelope, and
• retain a third copy for your records.

Procedures to be followed at the airport

Goods carried in the cabin

When a relevant traveller takes packages in the cabin of the aircraft or ship (that is, taken by hand into the departure lounge on the way to the cabin of the aircraft or ship) you must present the sealed bag to Duty Free Security (DFSC) staff or an authorised agent near the Outwards Control Point who will ^[94] :

• ensure that the package is examined to ascertain whether the seal has been broken or tampered with, and
• if the package has not been tampered with, compare the invoice details to the physical goods and ensure that the attached invoice copy is removed.

This process is commonly referred to as 'plucking' the invoice/sales docket.

Goods checked in as hold baggage

When a relevant traveller does not take packages in the cabin of the aircraft or ship, (that is, they are checked in as hold baggage) you must, at the point of surrender of the goods ^[95] :

• ensure that the seal has not been broken or tampered with, and
• remove the docket from the outside of the sealed bag and present it to DFSC staff or an authorised agent near the Outwards Control Point.

6.2.2 Exporting liquid, aerosol and gels duty free goods

The Department of Infrastructure and Regional Development introduced restrictions on the volume of liquid, aerosol and gels (LAGs) goods that an international passenger can take on board a flight in carry-on luggage.

This means that any LAGs goods over 100 millilitres must be packed in baggage that is checked in and therefore transported in the hold of the plane. Failure to comply with these arrangements will result in the traveller having to surrender the items at the security screening point. Effectively, this affects all alcohol purchased by relevant travellers from duty free stores.

This change in airport security impacts on outwards off-airport duty free stores as the outwards on-airport and inwards duty free stores operate either after the Customs barrier (outwards on-airport), or before it (inwards duty free), in which case the security risk is not an issue.

Any LAGs sold to a relevant traveller by an outwards off-airport duty free store must be sealed in a separate bag to other duty free purchases. You must complete a sales invoice in the same manner as all other sales although if the relevant traveller has other non-LAG duty free purchases (that is, cigarettes) then a separate docket must be completed for both bags.

The traveller must place the sealed LAGs bag into their luggage that is to be checked into the hold of the plane. They should remove the docket attached to the exterior of the sealed bag and, once inside the airport and past the Customs checkpoint, they must present it to Duty Free Security staff or an authorised agent.

Retrieved Invoices/Dockets

At monthly intervals, Duty Free Security will send to you a list of all dockets retrieved. You must then compare this list with your sales records and pay excise duty for those dockets which are not listed as retrieved.

This is done by completing a Duty-free operator return (NAT 10405) and sending it to us.

A duty-free operator return must be lodged within 21 working days of the shop after the end of a month. A return is required even if no stock shortages or missed dockets are identified. ^[96]

Missed dockets for LAGs should be treated in the same manner as missed dockets for other non-LAG goods.

For more details see ' Missed dockets ' later in this section.

Discrepancies at the airport

If a discrepancy is detected such as ^[97] :

• a package is not sealed or has been tampered with
• the invoice enclosed in the bag does not correspond with the attached outside invoice
• there is no enclosed invoice or attached outside invoice
• the package contains goods that are not as specified in the enclosed or attached invoice, or
• the package does not contain the goods that are specified on the attached invoice

you must provide us with:

• the name of the relevant traveller
• particulars of the intended exportation of the goods by the relevant traveller on the relevant flight or voyage such as
  • date and time of departure
  • relevant flight number and destination of the flight
  • relevant voyage, name of the ship and number or destination of the voyage
• the nature of the discrepancy.

You should include shortages detected in this way on your next duty-free operator return and pay the appropriate excise duty.

Internet and telephone sales

You or your staff (including the proprietor and the proprietor's servants and agents) can agree to sell duty free goods through the internet or over the phone as long as ^[98] :

• the person is a relevant traveller
• details of their intended travel have been given, and
• the agreement is subject to the condition that the sale takes place in the shop (that is the relevant traveller must pick the goods up from the shop).

Prior to the delivery of goods you must sight the ticket for the relevant flight which must match with the details provided at the time the agreement was entered into. ^[99]

Conditions travellers must be made aware of

You must ensure that relevant travellers are made aware of any conditions of a permission with which the traveller is required to comply. ^[100]

Travellers must, when they take possession of the goods, sign an approved form acknowledging their obligations concerning the export of the goods. ^[101]

Obligations of the relevant traveller are they:

• shall not remove, alter or otherwise interfere with an invoice attached outside the sealed package (except LAGs) ^[102]
• shall not break the seals or otherwise tamper with the integrity of the package ^[103]
• when taking a sealed package into a departure area or checking in a sealed package as baggage shall ^[104]
  • present the package sealed and with the outside invoice attached, and permit examination of the package and removal of the invoice by the duty free shop proprietor's agent. ^[105]

Sales to Diplomats, Consuls, Navy

In some circumstances, we may grant you permission to make sales to persons or organisations who are not relevant travellers. This includes sales to diplomatic missions, consular posts and the Royal Australian Navy.

If you make sales to the Navy, diplomatic missions or consular posts you may be entitled to a remission of the excise duty. ^[106] You should retain relevant documentary orders as proof of this entitlement.

For more information see Chapter 9 - Remissions and exemptions.

Record keeping and reporting

What records need to be kept?

You must keep, and make available to us when requested, records as directed. ^[107]

These will typically include proof of export of goods that have been delivered to a relevant traveller. This may be the electronic record of invoice numbers of dockets removed and provided to you by Duty Free Security. ^[108]

You may also be required to notify us of all sales made to which your permission applies. ^[109]

Further records to keep may include:

• copy of the sales invoice
• photocopy of the travel documents attached to the sales invoice
• stock records for excisable products
• underbond delivery notes for goods received from suppliers
• underbond delivery notes for goods removed
• copies of approved single movement permissions (SMP) for movement in and out of your licensed premises
• copies of approved remissions
• orders for goods delivered as excise free goods in prescribed circumstances such as diplomatic and consular sales
• documentation relating to your physical stocktakes.

What reports need to be prepared?

Prior to departure

If we direct you to, you must provide the following sales information prior to the date of departure of the flight or voyage ^[110] :

• name of shop
• name of relevant traveller
• details in relation to relevant flight or voyage
  • date and time of departure, and
  • flight number or name of ship and voyage number
• full description of any item included in the sale with a sale value of $500 or more
• the total number of items of the goods included in the sale
• total number of specially sealed packages in which the goods included in the sale are packed
• the total number of the specially sealed packages
  • that are able to be carried in the cabin of the aircraft or ship
  • that are not able to be carried in the cabin of the aircraft or ship, and
• the invoice numbers in respect of all invoices relating to the sale.

Proof of export

You must provide proof of export in the following manner:

• an electronic record must be made of the invoice numbers of all retrieved (plucked) invoices/sales dockets, and
• the electronic records must be created within 10 working days after the date of departure of the relevant traveller. ^[111]

Missed dockets

Within 21 working days after the end of the month you must lodge a return stating ^[112] :

• the name of the duty free shop
• the invoice number of each invoice
  • which has been prepared as set out in 'Invoice preparation' in this section
  • with a date of the proposed departure that is in that month, and
  • for which a copy has not been removed as set out in 'Procedures to be followed at the Airport' in this section
• full invoice details as set out in 'Invoice preparation' in this section, and
• the amount of excise duty payable in respect of the goods to which the invoice relates.

This is done by completing a Duty-free operator return (NAT 10405) and sending it to us.

You must pay to us the sum of the amounts of excise duty payable, at the rate in force when the goods were delivered to the relevant traveller. ^[113]

A 'nil' return is still required even if no stock shortages or missed dockets are identified.

Duty-free operator returns and rates of duty can be found on our website at www.ato.gov.au

6.2.3 Outwards duty free shops - on-airport

On-airport outward duty free shops are located after the Customs processing point.

Sale or delivery of duty free goods is only permitted to a 'relevant traveller' ^[114] who is able to show a ticket or other approved documentation that shows an international flight or voyage. ^[115] There is no requirement for the duty-free goods sold at on-airport duty free shops to be in sealed bags.

You must follow specific procedures in the invoicing of goods.

Sales to 'relevant travellers'

Invoice preparation

When you make a sale to a relevant traveller you must prepare, in duplicate, an invoice, being one of a series of sequentially numbered invoices, specifying ^[116] :

• the following particulars of the intended relevant flight or voyage
  • date of departure
  • flight number or other designation of the relevant flight
• a precise description of the goods, including
  • quantity, in figures, of each item of the goods
  • the sale value, in figures, of each item or quantity of items, and
  • the total sales value of those items and quantities of items.

Aircraft crew (or the pilots) are also eligible to purchase goods from you when they comply with the definition of 'relevant traveller'. In addition to the above, you must also record on the sales invoice ^[117] :

• the name and usual residential address of the relevant traveller, and
• the airport of departure.

You must prepare the invoices in a way that would make it impracticable to add other items to the description. ^[118]

Distribution of invoices

You must ^[119] :

• give one copy to the relevant traveller, and
• retain one copy for your records.

Internet and telephone sales

You or your staff (including the proprietor and the proprietor's servants and agents) can agree to sell duty free goods through the internet or over the phone as long as ^[120] :

• the person is a relevant traveller
• details of their intended travel have been given, and
• the agreement is subject to the condition that the sale takes place in the shop, that is the traveller picks the goods up in the shop.

Prior to handing the goods to the traveller, you must sight the ticket for the relevant flight which must match with the details provided at the time the agreement was entered into. ^[121]

Record keeping and reporting

What records need to be kept?

You must keep, and make available to us when requested, records as directed. ^[122]

You may also be required to notify us of all sales made to which your permission applies. ^[123]

These records may include:

• sales of excisable product
• stock records for excisable products
• underbond delivery notes for goods received from suppliers
• underbond delivery notes for goods removed
• copies of approved single movement permissions (SMP) for movement in and out of your licensed premises
• copies of approved remissions, and
• documentation relating to your physical stocktakes.

What reports need to be prepared?

You are not required to provide any particular reports however you may be directed to supply specific returns. If this is the case you will receive a specific direction to do so.

6.2.4 What happens when the traveller does not export goods?

The traveller's responsibilities and duties

If a traveller does not export the goods on the relevant flight or voyage they must, by noon of the next working day after the scheduled departure time:

• notify you ^[124]
  • if the traveller intends to export the goods on a subsequent flight or voyage, departing not more than 48 hours after the initial scheduled time, they must notify you of that intention along with the flight or voyage numbers and date and intended time of departure, or
  • if the traveller no longer intends to travel they must notify you no later than the close of business on the second working day after the initial scheduled departure time, and return the goods to your shop, and
• if having notified you that they intend departing on a flight or voyage as above, and they do not export the goods they must ^[125]
  • notify you that the goods have not been exported, not later than noon on the next working day after the specified date of departure, and
  • return the goods to your shop no later than the close of business of the second working day after the specified date of departure.

Your responsibilities and duties

You must:

• take returned goods back into stock (to be able to account for the sales invoice) ^[126] , or
• advise us of goods that were not exported via the Duty-free operator return that you are obliged to submit monthly ^[127] , and
• pay us the sum of the amounts of excise duty specified in the return. ^[128]

For more information about how to calculate and pay excise duty see Chapter 8 - Accounting for excisable goods

6.2.5 Prevention of collusion

You or your staff must not collude with passengers to obtain duty free goods. You must not enter into an arrangement with a traveller where goods delivered to the traveller under the permission are to ^[129] :

• be transferred to you upon return of the relevant traveller to Australia, or
• remain with you.

Any such collusion may result in the revocation of your permission and/or a court imposed penalty.

6.3 What do I do if I need more information?

If you need more information on excise, as it relates to duty free shops, contact us via the Online Services for Business or the other options as listed on the excise and EEG's contact webpage.

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

6.4 What penalties can apply to offences in relation to duty free shops?

The following are the penalties that may apply after conviction for an offence.

6.4.1 Move, alter or interfere

If you move, alter or interfere with excisable goods that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable goods. ^[130]

Note: This includes moving underbond excisable goods from your premises to any other location or for export.

If your movement of underbond excisable goods does not comply with the permission to move the underbond excisable products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable goods. ^[131]

6.4.2 Deliver

If you deliver excisable goods into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable goods. ^[132]

6.4.3 Records

If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

6.4.4 Evade

If you evade payment of any duty which is payable, the maximum penalty is five times the amount of duty on the excisable goods or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units. ^[133]

6.4.5 False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. ^[134]

Latest update

January 2022

Section

Changes and updates

Throughout

This chapter was updated to take into account the law changes that impacted the tobacco industry, as a result of which, there is no longer excisable tobacco goods manufactured in Australia that would be subject to excise control in the duty free shop or warehouse. The update also reflects the current duty rate and updates the references from the old Business Portal to the new Online Services for Business. Updated to new format and style including footnotes.

Details of previous updates are available through the versions linked to in the table below.

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).