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House of Representatives

Customs Amendment (Collecting Tobacco Duties at the Border) Bill 2018

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Home Affairs, Senator the Hon Linda Reynolds CSC)


The Black Economy Taskforce's Final Report (the Report), published in October 2017, included a number of recommendations with respect to tackling illicit tobacco. In particular, the Report examined the current arrangements for the payment of import duty on tobacco products, and concluded that the warehousing of tobacco creates a risk of tobacco being distributed from these warehouses without payment of import duty. Currently, when imported tobacco products are entered into a warehouse, import duty is not paid until the products leave the warehouse under an entry for home consumption. This risk would be diminished if import duty on tobacco was paid as soon as the tobacco is imported into Australia.

The 2018 - 2019 Budget 'Black Economy Package - combatting illicit tobacco' adopts a number of recommendations from the Report, in particular the recommendation that import duties be paid on tobacco as soon as it is imported into Australia. The Customs Amendment (Collecting Tobacco Duties at the Border) Bill 2018 will amend the Customs Act 1901 (the Customs Act) to provide a legislative basis for this recommendation.

From 1 July 2019, tobacco importers will be required to pay import duty on tobacco products upon importing tobacco products into Australia. From that date, the option to enter imported tobacco products into a licensed warehouse without the payment of import duties will no longer be available.

From 1 July 2019, it will also no longer be possible for duty to be paid on tobacco products on a weekly or monthly basis in accordance with permissions granted under section 69 of the Customs Act. Any such permissions that are in force on 1 July 2019 will have no effect in respect of periods after 1 July 2019.

Further, movement permissions to allow the movement of tobacco products to or from warehouses will cease on 1 July 2019. However, movement permissions that do not relate to warehouses will continue to be granted after this date to allow tobacco products to be moved, including between wharves and customs depots.

Special arrangements will apply to tobacco products that are still in warehouses on 1 July 2019. Broadly speaking, owners of these tobacco products will be required to enter them for home consumption on that date and pay the outstanding duties unless they enter into an arrangement to pay the outstanding duty over the following 12 months, and provide a security for so doing. Owners of tobacco products who do neither of these things may have their tobacco products sold or otherwise disposed of by the Government.

Tobacco products that are in duty free stores or warehouses exclusively used to supply aircraft's stores or ship's stores on 1 July 2019 will be exempt from these transitional arrangements.

Financial Impact Statement

The 2018 - 2019 Budget 'Black Economy Package - combatting illicit tobacco' measure is expected to have the following revenue impact over the forward estimates:

Revenue ($m)

2017-18 2018-19 2019-20 2020-21 2021-22 Total
Department of Home Affairs - 10.0 3,275.0 180.0 230.0 3695.0
Australian Taxation Office - 1.0 5.5 12.0 17.0 35.5
Total - Revenue - 11.0 3,280.5 192.0 247.0 3730.5

Statement of Compatibility with Human Rights

A Statement of Compatibility with Human Rights has been completed in relation to the amendments in this Bill and assesses that the amendments are compatible with Australia's human rights obligations. A copy of the Statement of Compatibility with Human Rights is at Attachment A.

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