Excise guidelines for the tobacco industry
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
4 LICENSING: Suspension and cancellation
4.1 PURPOSE
This Chapter deals with:
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- what happens when you cease your business
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- when your licence can be suspended or cancelled
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- service of notices, and
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- penalties that can apply to offences in relation to suspensions and cancellations.
4.2 INTRODUCTION
Your licence remains in force until it expires or is cancelled. However, activities approved under your licence may be restricted if we suspend your licence. Suspension may be a temporary measure or may lead to the cancellation of your licence.
We can cancel your licence if:
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- you ask us to do so (for example, where you intend to cease business), or
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- we make a decision to do so because one or more of the following criteria are present
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- you or an associate are not 'fit and proper' as an individual or company
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- a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person
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- a person who participates in the management or control of the premises is not a 'fit and proper' person
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- you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence
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- the physical security of the premises is inadequate
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- the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises
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- you have no market for the goods covered by the licence
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- you are not keeping proper books of account for audit purposes
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- you have breached a condition of your licence
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- you have made a false or misleading statement to us [132]
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- suspension is necessary for the protection of the revenue
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- (if you are the holder of a manufacturer licence) suspension is necessary to ensure you comply with excise law, or
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- you have not, for a period of at least 3 years, conducted any activities authorised by the licence at the premises covered by the licence.
4.3 POLICY AND PRACTICE
4.3.1 IF YOU CEASE YOUR EXCISE BUSINESS
Your licence conditions require you to notify us within 30 days if you permanently cease activities that require an excise licence. To finalise your excise obligations, you must request cancellation of your licence in writing. [133]
Before we can cancel your licence, we must be satisfied that any ' tobacco ' seed, plant or leaf, or ' excisable tobacco goods ' you had in your possession have been correctly dealt with. To be satisfied of this, we will:
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- arrange a final audit of goods at the premises covered by the licence, and
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- work out if you are liable to pay any excise duty.
Although your licence conditions require you to notify us within 30 days of cessation of activities, you are encouraged to notify us at the earliest opportunity. This will enable us to assist you to check your records and any stock on hand prior to closure of the site for excise purposes.
If you want to sell your business with the stock included, we can coordinate your licence cancellation with the licence approval for the new owner. (This does not mean that the new owner will automatically be granted a licence). This will ensure the premises and goods are covered by a licence at all times.
If you do not intend to sell the goods with your business, you can:
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- pay any outstanding excise duty on goods held at premises covered by the licence and then dispose of them as you wish, or
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- move goods to another premises covered by a licence, provided you have permission from us to move the goods to those premises. [134]
We will cancel your licence by giving you written notice. [135]
If you do not comply with the requirements of the notice, the goods will be sold or otherwise disposed of. [136]
4.3.2 SUSPENSION OR CANCELLATION OF A LICENCE
The difference between suspension and cancellation
Suspension of a licence is a temporary measure we may take that limits the activities you can undertake during the period of suspension. It could be followed by cancellation of the licence or revocation of the suspension. Cancellation is a permanent measure which has the effect of prohibiting you from undertaking the activities for which you were previously licensed.
When your license can be suspended or cancelled
We can suspend or cancel your licence if we have reasonable grounds for believing [137] :
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- you or an associate are not 'fit and proper' as an individual or company *
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- a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person *
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- a person who participates in the management or control of the premises is not a 'fit and proper' person *
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- you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence *
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- the physical security of the premises is inadequate *
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- the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises *
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- you have no market for the goods covered by the licence *
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- you are not keeping proper books of account for audit purposes
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- you have breached a condition of your licence
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- you have made a false or misleading statement to us
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- suspension is necessary for the protection of the revenue *
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- (if you are the holder of a manufacturer licence) suspension is necessary to ensure that you comply with excise law, or
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- you have not, for a period of at least 3 years, conducted any activities authorised by the licence at the premises covered by the licence.
* For an explanation of these criteria, please refer to Section 3.3.1 Licensing criteria.
The criteria which have not been the subject of previous description are [138] :
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- You are not keeping proper books of account for audit purposes. For this criterion, we are assessing your actual record-keeping practices during the licence period and whether they are in an adequate state for an audit.
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- You have breached a condition of your licence. A breach means you have not complied with a condition. In deciding whether or not to suspend, we will take into account the
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- condition breached (that is, the risk it is addressing)
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- severity of the breach
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- relevant circumstances surrounding the breach.
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- You have made a false or misleading statement to us. In considering your initial application, the false or misleading statements we take into account are in your application. Once you have been granted a licence, we can take into account any statements (including, for example, in a return, letter or response to a question) you have made in relation to your excise activities.
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- You are not complying with your obligations under the Excise Act - for example, if you have been manufacturing excisable tobacco goods in contravention of your manufacturer licence. [139]
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- You have not, for a period of at least 3 years, conducted any activities authorised by the licence at the premises covered by the licence. We will consider suspending the licence where, for example, you have not manufactured excisable tobacco goods for the previous 3 years at the premises covered by the licence and it is unlikely you will do so in the near future.
If we believe your conduct warrants consideration of suspension of your licence, we will generally advise you of our concerns and provide you with an opportunity to explain and rectify the issues identified.
If we decide to proceed with the suspension of your licence, this will be done by serving a Notice of suspension. The notice may be served on you or given to a person who appears to participate in the management or control of the premises covered by the licence.
A Notice of suspension will state that, if you want to stop the cancellation of your licence, you must provide us with a written statement, within 7 days of the notice being served, giving reasons why your licence should not be cancelled. We will include our reasons for deciding to suspend your licence with the Notice of suspension.
The notice will also state the date from which the suspension takes effect, which could be immediately.
When your licence is suspended, unless you have written permission from us, it is against the law to [140] :
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- produce or store tobacco seed, plant or leaf if you are the holder of a producer licence
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- deal in or store tobacco seed, plant or leaf if you are the holder of a dealer licence
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- manufacture excisable tobacco goods or keep or store tobacco leaf if you are the holder of a manufacturer licence.
During the period of suspension, we may give you written permission to [141] :
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- keep or store goods at premises covered by your licence
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- carry out a process at your premises, or
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- move goods from your premises to another place.
As a result of a suspension, we may:
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- require you, the owner of the tobacco seed, plant or leaf or excisable tobacco goods to move the goods from your premises to another place
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- require payment of any costs incurred by us as a result of the suspension
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- carry out a stocktake so that the total excise liability is known, and
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- take control of premises covered by your licence and any tobacco seed, plant or leaf or excisable tobacco goods stored at these premises.
If we suspend your licence, we have 28 days to cancel your licence. During this period, we can revoke the suspension if you satisfactorily address the issues which led to the suspension. If we revoke a licence suspension, we will do so in writing. We may impose additional conditions or allow you to resume your excise activities under the existing conditions.
All decisions relating to the suspension of a licence are reviewable by lodging an objection. [142]
We can cancel your licence for the same reasons we can suspend your licence.
If we cancel your licence, we will serve you with a Notice of cancellation. If we cancel your licence, you are not permitted to manufacture, store, produce or deal in excisable products or tobacco seed, plant or leaf. You are also not permitted to move excisable goods without our permission.
The Notice of cancellation may be served on you or given to a person who appears to participate in the management or control of the premises covered by the licence. We will include our reasons for deciding to cancel your licence with the Notice of cancellation.
A direction notice, in writing, will also be served requiring you to either [143] :
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- pay the duty on the goods, or
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- move the goods to another place in accordance with our permission.
If the owner does not comply with the direction notice to pay duty or move the goods, we may remove them from the owner's control. We may sell or dispose of the excisable tobacco goods [144] if, after 6 months, the owner has not:
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- lodged a written claim for the goods, and
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- paid the duty and other movement and storage related expenses.
Dealing with tobacco seed, plant or leaf when a licence is cancelled
If tobacco seed, plant or leaf remains on the premises after cancellation, we can give you permission to move it to someone who does have a licence. [145] If you do not do so, we can seize the tobacco seed plant or leaf as forfeited goods. [146]
If you are not satisfied with our decision to cancel your licence or dispose of your excisable goods, you can request a review of our decision by lodging an objection. [147]
Applying for another licence after a licence cancellation
You can apply for another licence after you have a licence cancelled. However, we will take the reasons for the cancellation into account when considering any new application.
4.4 PROCEDURES
Notices of suspension or cancellation and directions to deal with excisable tobacco goods will be served either [148] :
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- personally or by post [149] on you, or
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- personally on a person who, at the time the notice is served, appears to participate in the management or control of the premises covered by the licence.
If you need more information on suspension or cancellation of a licence, you can contact us via:
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- ATO Online Services
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- phone 1300 137 290
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- write to us at
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640
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.
4.5 PENALTIES THAT CAN APPLY IN RELATION TO SUSPENSIONS AND CANCELLATIONS
The following are the penalties that may apply after conviction for an offence.
If you intentionally produce tobacco seed or tobacco plant when your producer licence is suspended, the penalty is a maximum of 2 years in prison or up to 500 ' penalty units '. [150]
If you intentionally produce tobacco leaf when your producer licence is suspended, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. [151]
If you intentionally deal in tobacco seed or plant when your dealer licence is suspended, the penalty is a maximum of 2 years in prison or 500 penalty units. [152]
If you intentionally deal in tobacco leaf when your dealer licence is suspended, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. [153]
If you intentionally manufacture excisable tobacco goods when your manufacturer licence is suspended, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable tobacco goods. [154]
If you intentionally keep or store tobacco leaf when your manufacturer licence, producer licence or dealer licence is suspended, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. [155]
If your licence has been cancelled or expired, you must not without our permission remove excisable tobacco goods on which duty has not been paid from the premises covered by the licence. The penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable tobacco goods. [156]
If your licence has been cancelled or expired, you must not without our permission, remove tobacco seed or plant from the premises covered by the licence. The penalty is a maximum of 2 years in prison or 500 penalty units. [157]
If your licence has been cancelled or expired, you must not without our permission, remove tobacco leaf from the premises covered by the licence. The penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. [158]
A strict liability penalty of 100 units can apply to all offences included in this section. [159]
4.6 TERMS WE USE
Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule.
This Guide deals with both controlled tobacco products (tobacco seed, plant and leaf) and excisable tobacco goods.
The term excisable tobacco goods include:
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- pouch tobacco
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- cigars
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- cigarettes
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- shisha or molasses tobacco, and
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- snuff.
The value of a penalty unit is contained in section 4AA of the Crimes Act 1914, and is indexed regularly. The dollar amount of a penalty unit is available at Penalties .
Tobacco means tobacco leaf subjected to any process other than curing the leaf as stripped from the plant. [160] Tobacco includes any thing (including moisture) added to the tobacco leaf during manufacturing or processing. [161]
This means that until tobacco leaf is subjected to processes after curing it is not excisable. However tobacco seed and plant is a controlled substance and as such you need to hold an excise producer or dealer licence to be in possession of these goods.
The species of the Nicotiana genus that are generally used for smoking, chewing or snuff are considered to produce tobacco leaf. Those species are currently Nicotiana tabacum, Nicotiana rusticum and Nicotiana sylvestris.
Amendment history
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| Throughout | Content checked for technical accuracy and currency.
Updated in line with current ATO style and accessibility requirements. |
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
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References
| Date: | Version: | |
| 1 July 2006 | Updated document | |
| 1 September 2014 | Updated document | |
| 1 April 2015 | Updated document | |
| 17 December 2021 | Updated document | |
| You are here | 1 October 2025 | Current document |