ATO Interpretative Decision
ATO ID 2007/34
Excise
Excise: Licensing conditions - notification of non-renewal of lease on licensed premisesFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can the Collector impose a condition on a licence under subsection 39D(3) or paragraph 39DA(1)(b) of the Excise Act 1901 requiring a licence holder to notify the Collector in writing no later than 30 days prior to the event that the licence holder's occupancy of licensed premises will be terminated?
Decision
Yes. The Collector may impose a condition on a licence under subsection 39D(3) or paragraph 39DA(1)(b) of the Excise Act requiring a licence holder to notify the Collector in writing no later than 30 days prior to the event that the licence holder's occupancy of licensed premises will be terminated.
Facts
An entity has applied for a manufacturer licence.
The applicant intends to carry on a business manufacturing excisable goods from leased premises.
Reasons for Decision
All legislative references are made to the Excise Act.
Subsection 4(1) defines 'Collector' to mean the Commissioner of Taxation or an authorised officer.
An application for a licence may be made under section 39. Section 39A provides that the Collector has discretion whether or not to grant a licence.
If the Collector chooses to grant a licence, the licence is subject to the conditions set out in subsection 39D(1), any conditions prescribed under subsection 39D(2) and any conditions specified in the licence under subsection 39D(3).
The conditions specified under subsection 39D(3) are conditions that are considered by the Collector to be necessary or desirable for the protection of the revenue or for the purpose of ensuring compliance with the Excise Acts. Under paragraph 39DA(1)(b) the Collector may impose additional conditions on an existing licence.
The term 'necessary for the protection of the revenue' was considered in Re Francesco Martino Applicant v. Australian Taxation Office Respondent (2002) AATA 1242 (Martino).
The following two elements for the protection of the revenue may be drawn from Deputy President Forgie's judgement.
- •
- the need to ensure that the Commonwealth receives all that it should in the form of any excise that is ultimately payable, and
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- that the Commonwealth does not have to incur excessive expenditure in ensuring clients' compliance with their excise responsibilities.
The entity has applied for a manufacturer licence in respect of the premises they are leasing.
The imposition of a condition on the licence to the effect that the licence holder must notify the Collector in writing no later than 30 days prior to the event that the licence holder's occupancy of licensed premises will be terminated is necessary to protect the revenue and ensure compliance with the Excise Acts for the following reasons:
- 1.
- If the entity's lease expires and they lose access to those premises, any excisable goods subject to the Commissioner's control upon which duty has not been paid that are still present at the premises will no longer be subject to the control of the licence holder. Rather the new tenant of the premises (or the landlord if the property remains untenanted) will have access to the goods. This will undermine the safety of the goods (thus posing a risk to the revenue), and will also render it impossible for the licence holder to ensure they comply with their obligations under the Excise Act in respect of those goods.
- 2.
- If the entity intends to move to alternative premises, the entity will need to notify the Collector of this so that the Collector has time to determine whether a licence should be issued specifying the new premises. Paragraph 39A(2)(g) provides that the Collector may refuse to grant a licence if the security of the proposed premises is inadequate. It is an offence under section 27 if the licence holder manufactures excisable goods at premises that are not specified in their manufacturer licence. Therefore it is important from both the licensee's viewpoint and the protection of the revenue viewpoint that the Collector has adequate time to consider whether a licence should be issued for the new premises.
- 3.
- Section 117A provides that it is an offence to move excisable goods that are subject to the Commissioner's control from one place to another without the Collector's permission. The Collector may grant permission under section 61A, but needs time to consider whether such permission should be given.
The above factors justify the imposition by the Collector of a condition requiring a licence holder to notify the Collector in writing no later than 30 days prior to the event that the licence holder's occupancy of licensed premises will be terminated.
Date of decision: 16 February 2007
Legislative References:
Excise Act 1901
subsection 4(1)
section 27
section 39
paragraph 39(2)(d)
subsection 39D(1)
subsection 39D(2)
subsection 39D(3)
Part IV
Case References:
Re Francesco Martino Applicant and Australian Taxation Office Respondent
[2002] AATA 1242
(2002) 70 ALD 403
Keywords
Excise
Excise collections
Licensing
ISSN: 1445-2782