Bills Digest No. 119 2003-04
Excise and Other Legislation Amendment (Compliance
Measures) Bill 2004
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main provisions
Concluding comments
Endnotes
Contact Officer & Copyright Details
Passage History
Excise
and Other Legislation Amendment (Compliance Measures) Bill
2004
Date Introduced:
25 March 2004
House: House of Representatives
Portfolio: Treasury
Commencement:
Sections 1 to 4 commence
on Royal Assent, with Schedules 2, 3 and 4 commencing the day after
Royal Assent. Commencement dates vary for different sections in
Schedule 1.(1)
The main purpose is to amend excise and
customs legislation to provide the Australian Tax Office (ATO) with
greater compliance and administrative powers with respect to the
payment of excise. The target appears to be persons seeking to
avoid the payment of excise on tobacco.
Background
The Excise and Other Legislation Amendment
(Compliance Measures) Bill 2004 (hereafter: the Bill ) contains
four groups of amendments. Each of these are contained in a
separate schedule in the Bill.
The amendments in Schedule 1
are aimed at persons that attempt to avoid payment of excise by
exploiting weaknesses in the ATO s(2) ability to control
the movement of such goods that are, or were, ostensibly intended
for export.(3) This weakness relates to movements of
goods that are legislatively under ATO control but are actually
authorised by the Australia Customs Service (Customs). Such
authorisations originate from the fact that Customs used to
administer both customs and excise legislation, whereas excise is
now administered by the ATO. In relation to the tobacco industry,
the Explanatory Memorandum to the Bill comments:
The diversion of excisable goods from export,
particularly tobacco products, is considered to be high risk. There
have been instances where excisable goods for export have not
reached, or been diverted from within, the place of export. In
other cases, the goods have not reached their overseas destination
and it is unclear where they have been diverted. Containers have
been found empty or not to contain the goods as described. However,
as the goods are excisable, not customable, the provision for
recovery of duty equivalent, available for goods under the control
of Customs, cannot be applied.(4)
Schedule 1 will effectively
require relevant movements to be explicitly authorised by the ATO,
thus enhancing their ability to ensure any excise due is in fact
paid. It will also tighten accountability requirements for persons
to whom excisable goods are delivered for export. See the relevant
part of the Main Provisions section of this Digest for details.
The second group of amendments deal with a
similar issue, but apply only to tobacco products. Under
Schedule 2, movement of tobacco seed and plants
will now require the permission of the ATO. Currently only tobacco
leaf requires this. Also, an offence will be created where tobacco
seed/plant delivered for export is not exported and is not returned
to a specified place in accordance with the relevant ATO export
permission.
Schedule 3 will allow the ATO
to dispose of seized excisable goods in a wider range of
circumstances than at present. Currently disposal can only occur
where the goods are perishable goods and the ATO is
satisfied the retention of the goods would constitute a danger to
public health.
The fourth change relates to confidentiality.
At present, confidentiality provisions applying to the Excise
Act 1901 prevent the ATO from disclosing information about
excise licences and permissions relating to goods to a second
person that wishes to deal with the goods. The problem is
illustrated by the Explanatory Memorandum:
Information on whether a person is licensed or has
a permission to deal with particular goods or quantities of goods
is at times a prerequisite for a second person to comply with the
provisions of the legislation. The problem is illustrated in the
illicit trade in tobacco, which poses a significant risk to the
revenue base. It is an offence for a person to buy tobacco seed,
leaf or plant from an unlicensed producer, manufacturer or dealer.
However, the ATO is unable to provide information about licence
status and conditions. Therefore, a tobacco cooperative with a
dealer s licence cannot be advised whether a member is licensed as
a producer or when a member s licence is cancelled or
suspended.(5)
The change in Schedule 4 will
allow release of otherwise confidential information in such
circumstances.
Commencement: Items
4 to 9 commence on a day to be fixed by
proclamation or, failing that, six months after Royal assent.
Commencement of items 1 to 3
depends on commencement of the Customs Legislation Amendment
and Repeal (International Trade Modernisation) Act 2001.
Items 1 and
2 are essentially identical provisions designed to
delete existing paragraph 114D(2)(b) of the Customs Act
1901. Depending on the commencement time of item 62 in Part 3
of Schedule 3 to the Customs Legislation Amendment and Repeal
(International Trade Modernisation) Act 2001,(6)
item 1 may never come into force, in which case
the deletion of existing paragraph 114D(2)(b) will be achieved by
item 2. Alternatively, item 1 may
come into force to be eventually replaced by item
2. By deleting paragraph 114D(2)(b), goods that are to be
moved out of a customs-licensed place because of cancellation or
delay in export plans must have explicit permission of the ATO to
do so. This requirement allows the ATO to maintain adequate control
of such movements to ensure any excise payable is not avoided.
Item 7 performs a similar
function by repealing existing section 61AB of the Excise Act
1901 so that Customs cannot effectively authorise movement of
excisable goods under the Customs Act 1901 for export.
Movement of such goods will now require permission from the ATO
under section 61A of the Excise Act 1901. Item
8 inserts new subsections 61A(2A) and
(2B) which allow the ATO to give such permission
on a one-off or ongoing basis.
Item 5, which inserts a
new section 60(1C), covers the situation where
goods have been delivered for export under a section 61A permission
but on which excise has not been paid. The ATO may make a written
demand for payment of excise to a person who is entrusted with
possession or control of these goods if they fail to either (i) to
keep the goods safely or (ii) satisfy the Collector that the goods
have been exported or otherwise satisfactorily account for
the goods. Item 5 also provides that, for the
purposes of establishing exportation of the goods, mere evidence of
delivery for export does not constitute evidence that the goods
have been exported: new subsection 60(1D).
Under existing section 117D of the Excise
Act 1901, movement of tobacco leaf requires the permission of
the ATO. Such permissions are issued under section 44 and may have
conditions applied to them. Where it involves intention or
recklessness, the maximum penalty for unlawful movement of tobacco
leaf, including contravention of a section 44 condition, is 2 years
imprisonment or 500 penalty units ($55 000)(7),
plus 5 times the amount of excise duty that would have been payable
on the goods. A strict liability offence for unlawful
movement/breach of condition also exists, in which case the maximum
penalty is 100 penalty units ($11 000).(8) Items
1-3 and 5-9 make tobacco seeds and plants
subject to these permission provisions and offences by amending
various parts of existing sections 44, 116 and 117 of the
Excise Act 1901.
Item 4 inserts new
subsections 44(7)-(9) in the Excise Act 1901.
New subsection (7) provides that if a person
knowingly or recklessly contravenes a condition of a section 44
permission before the tobacco seed, plant or leaf was
actually moved, any subsequent movement is taken to have been
without permission. Such contravention then enables any tobacco
seed, plant or leaf to be forfeited to the Government under
existing section 116. No rationale for this new provision is given
in the Explanatory Memorandum or Second Reading Speech.
New subsections 44(8)-(9)
deal with a situation where a person has a section 44 permission to
deliver tobacco seed, plant or leaf for export but the relevant
goods are, for whatever reason, not exported within 30 days (or
other period specified in the permission) after the day of delivery
for export. If a person fails to return the goods to a place
specified in a permission within five days after the end of the 30
day or other specified period, or the goods are not
destroyed,(9) the person commits an offence. The same
maximum penalties as mentioned above 2 years imprisonment etc
apply.
Item 1 replaces existing
subsection 107FJ(1) of the Excise Act 1901 to allow the
ATO to deal with (including destroy) goods where they are
perishable, or do not meet any applicable quality standard
or where the goods, if made available to the public, would
constitute a risk to public health or public safety. Existing
subsection 107FJ(6) allows for the owner of the goods to claim
compensation for goods where the Court is satisfied that the
grounds for dealing with the goods under section 107FJ(1) did not
in fact exist. Item 2 makes a consequential
amendment to subsection 107FJ(6) by incorporating a listing of the
revised grounds contained in item 1. Item
3 inserts new subsection 107FJ(8) which
defines perishable goods as including goods that will perish unless
treated with chemicals to preserve them or stored in special
conditions.
Item 4 adds new
sections 107GB-GD which deal with record keeping of goods
dealt with under revised section 107FJ.
Essentially new section 107GB requires the taking
of a sample and preparation of a written record of the goods in
question. New section 107GD provides that
evidentiary certificates and analysts certificates may be issued
which constitute prima facie evidence, in proceedings relating to
the disposed goods, of the matters stated in the certificates. Such
proceedings would include a claim for compensation under
revised subsection 107FJ(6). Standard provisions
regarding matters such as cross-examination of a person signing any
certificate are included in new section 107GB.
Under subsection 159(2) of the Excise Act
1901, it is an offence to record or disclose confidential
information ( protected information/documents in the language of
the Act) that the person has obtained in the course of official
employment. However, exceptions to this are listed in subsection
159(3). Items 1 and 2 create
another category of exception in new subsection
159(3A). Whilst there are various technical criteria that
have to be met for new subsection 159(3A) to
apply, a key element is the person disclosing the information (the
entrusted person) must have formed the opinion that the disclosure
is necessary to ensure the dealing, or proposed dealing with
excisable goods, is in accordance with the Act.
The ATO s ongoing campaign against the
illegal tobacco sector has been well documented in the press in
recent years.(10) Presumably the various measures
contained in this Bill are designed to
assist the effectiveness of this campaign. Some of these measures
do create new offences and/or require greater accountability for
persons involved in the tobacco and export sectors. With this in
mind, it is notable that neither the Explanatory
Memorandum nor the Second Reading Speech indicate that any industry
consultation has occurred in framing this
Bill.
-
See Main Provisions section of this Digest for details on
Schedule 1 commencement.
-
ATO control over excise matters in the Excise Act 1901
is sometimes expressed to be in the hands of the CEO (Tax
Commissioner) or the Collector (the Tax Commissioner or someone
duly authorised for the purposes of the particular provision). In
this Digest, the generic term ATO is used rather than CEO or
Collector.
-
Goods that are subject to excise if consumed in Australia may be
exempt if exported.
-
P. 6.
-
P. 17.
-
To be fixed by proclamation.
-
$275 000 for companies.
-
$55 000 for companies.
-
A person accused of a new section 44(8) offence bears the burden
of proof as to the fact the goods have been destroyed.
-
For example, Seizures burn hole in illegal tobacco racket ,
The Australian, 16 June 2003 p. 5.
Angus Martyn
1 April 2004
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 2004
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Published by the Parliamentary Library, 2004.
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