Excise guidelines for duty free shops

• This document has changed over time. View its history.

Chapter 9 - Remissions and exemptions

Purpose

This chapter deals with:

• when you can apply for a remission
• when excisable goods are exempt from excise duty
• who can access excisable goods free of excise duty
• how to apply for a remission
• how to obtain permission to deliver goods to diplomatic and consular personnel
• what requirements must be met to make sales to diplomatic and consular personnel, and
• penalties that can apply to offences in relation to remissions and exemptions.

9.1 Introduction

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture. If the remission is approved, you are no longer liable for the duty.

In some circumstances the excise duty may be subject to a complete or partial remission. ^[160]

9.2 Policy and practice

9.2.1 When can I apply for a remission of excise duty?

You can apply for a remission of excise duty payable on your excisable goods if the following circumstances apply while the goods are subject to excise control ^[161] :

• Where the excisable goods have deteriorated or been damaged, pillaged, lost or destroyed, or become unfit for human consumption ^[162]
• Where the goods are not worth the amount of excise duty payable on the goods. ^[163]

	'Pillaged' means to strip of money or goods by open violence, as in war; plunder. [164] This does not cover simple cases of theft.
	For more information about payment of duty see Chapter 8 - Accounting for excisable goods.

Example 9A A carton of bottled brandy is dropped inside the duty free shop damaging the contents. The duty free shop applies for a remission of duty on the damaged goods. On receiving approval, the duty free shop destroys the damaged goods and retains records of the destruction. Example 9B Other excisable beverages containing milk products remain unsold in a duty free shop and have deteriorated to a point where they are unfit for human consumption. The duty free shop applies for a remission of duty on the beverages. On receiving approval, the duty free shop destroys the unsaleable stock and retains records of the destruction. Example 9C A carton of spirits is water damaged and the packaging and labels of the bottles is severely affected. They would only be able to be sold at a greatly reduced price, which is less than the excise duty that would be payable on the spirits. The duty free shop applies for a remission of duty on the beverages. On receiving approval, the duty free shop destroys the unsaleable stock and retains records of the destruction.

9.2.2 How do I apply for a remission?

An application for a remission must be submitted in writing. Records to substantiate your claims must be maintained and produced when requested. ^[165]

To ensure the excisable goods do not find their way into the Australian domestic market we may wish to inspect or supervise the disposal of the goods. If underbond goods must be destroyed off site, you must apply for a movement permission to move them from the licensed premises to the place of destruction.

	Unless excisable goods have been accidentally destroyed, you should contact us before moving or destroying any that are subject to remission. We will provide you with direction and advise if the goods are to be inspected or the destruction supervised.
	For more information about movement permissions refer to Chapter 5 - Movement permissions.
	To apply for a remission, send us a completed Excise remission (NAT 4289). You can use the Excise remission instructions (NAT 15769) to help you complete this form.

If you are not satisfied with our decision to refuse your remission, you can request a review of our decision by lodging an objection within 60 days.

For information about your review rights refer to Chapter 10 - Reviews and objections.

9.2.3 When are excisable goods not liable to excise duty?

Excisable goods are not liable to duty if they are:

• sold for use as ship's or aircraft's stores ^[166] , or
• subject to remission without application. ^[167]

What are ship's and aircraft's stores?

Ship's and aircraft's stores are goods for the use of passengers or crew on international journeys or for the service of ships or aircraft on international journeys (for example, alcohol for sale to passengers on board a cruise liner).

There are limits on the quantities of excisable products that are not liable to excise duty as ship's or aircraft stores. ^[168]

Excisable alcohol beverages other than beer must not be sold to a passenger or crew other than by the glass or by nip. ^[169]

If you supply ship's or aircraft's stores underbond, you must obtain a movement permission to move the goods from the licensed premises to the place of export.

When are excisable goods subject to remission without application?

Excisable goods are subject to remission without application (this effectively means they are free from duty) when they are sold by duty free shops:

• to diplomatic missions and foreign consular posts for official use but not for trade ^[170] (see section 9.3.1), and
• for use by the personnel of sea-going vessels of the Australian Defence Force. ^[171]

Some restrictions apply to excisable goods for the Australian Defence Force:

• The goods must be for consumption by the personnel of sea-going vessels of the RAN or the AMF when
  • such vessels are in full commission, and
  • the products are consumed on such vessels. ^[172]
• Only certain excisable goods are eligible for this concession, including
  • ale, port and other beer
  • brandy
  • whisky
  • rum
  • gin
  • liqueurs, and
  • tobacco goods.

To supply excisable goods under these circumstances, you must first ensure the receiver meets the relevant criteria. For example, you should only accept orders, stating that the goods are for official use, on the official stationery, or official order, of eligible people or organisations. You must keep a copy of this documentation.

You do not have to apply for a remission and you do not have to include these transactions on a duty-free operator return.

9.3 Procedures

9.3.1 How do I get permission to deliver goods to diplomatic missions and consular personnel?

Duty free Shops are only allowed to sell underbond goods to diplomatic missions (embassies) and consular posts and claim a remission without application, providing that they have applied for and been granted a separate permission to deliver goods for home consumption 'without entry' to diplomatic and consular personnel. ^[173]

A periodic settlement permission (PSP) is the most common arrangement for the recurrent delivery of goods subject to excise into the Australian domestic market. A PSP allows the reporting of deliveries and payment of duty owed on a periodic basis after the goods have been delivered into the Australian domestic market. ^[174]

Your PSP will be conditioned to only allow duty free deliveries to diplomatic missions and consular posts ^[175] . As sales to diplomatic missions and consular posts are not liable to excise duty, the period for lodging returns can be set for any period (for example, weekly, monthly or annually) ^[176] . Your PSP requires you to lodge an excise return (even a 'nil' return) following the end of the set period. ^[177]

If you apply for a storage licence with permission to sell duty free, you can use your application form to indicate whether you need permission to deliver goods to diplomatic and consular missions. You do not need to complete a separate application.

If you originally chose not to apply for permission to deliver goods to diplomatic and consular missions, contact us and provide us in writing with your:

• licence details (if you have one), and
• reasons for applying for this permission.

Permission to deliver goods to diplomatic and consular missions is not transferable to another person and remains in force until revoked.

We may also:

• refuse to grant permission
• impose further conditions on your permission, or
• cancel your permission.

Failure to comply with a condition may result in the cancellation of the permission. In such an instance, we would take into account a variety of factors, including your compliance history.

A decision to refuse or to cancel a permission is not reviewable under the objection process. However, there may be other avenues for review, for example, you may seek an informal review of our decision.

	For information about your review rights refer to Chapter 10 - Reviews and objections.
	For more information about diplomatic and consular sales, contact us by phoning 1300 137 295.

9.3.2 What requirements apply to sales to diplomatic and consular personnel?

When making diplomatic and consular sales you are required to:

• only make sales after receiving official orders from appropriate diplomatic mission or consular post personnel
• only deliver goods to diplomatic mission or consular posts or authorised personnel
• ensure each order is accompanied by an appropriate invoice and retain appropriate records
• You should only accept orders on the official stationery, or official order, of eligible people or organisations. You must keep a copy of this documentation.

Example 9D A duty free shop receives an order from a diplomatic mission for alcohol, for official use. The duty free shop delivers the alcohol, into the Australian domestic market (to the diplomatic mission), under the terms of their periodic settlement permission. The duty free shop retains copies of the order, invoice and all other relevant documentation for their records.

9.3.3 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.

9.4 What penalties can apply to offences in relation to remissions and exemptions?

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

9.4.1 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. ^[178]

9.4.2 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. ^[179]

9.4.3 False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. ^[180]

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.

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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).