Bills Digest No. 28 2005–06
Customs Tariff Amendment Bill
(No. 2) 2005
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
Contact Officer & Copyright Details
Amendment Bill (No. 2)
Introduced: 23 June
House: House of Representatives
Portfolio: Justice and Customs
The substantive provisions
of the Bill will commence on Royal Assent. All amending items
will commence retrospectively items 1 to 3 will commence on 1 July
2005, items 4 to 7 on 11 May 2005.
The Customs Tariff Amendment Bill
(No. 2) 2005 ( the Bill ) proposes to make changes to Schedule 3
and 4 of the Customs Tariff Act 1995 ( the CTA ) to:
insert an upper alcohol content a view to harmonising the tax
rates applicable to locally produced and imported grape wine above
a certain upper alcohol content
apply wine equalisation tax to certain imported wine based cream
remove the customs duty which applies to certain goods which are
subject to Tariff Concession Orders.
Locally produced grape wine (wine) with an alcohol content of
less than 22 percent of volume of ethyl alcohol (alcohol content)
is not subject to excise. On the other hand, locally produced wine
with an alcohol content of more than 22 percent, attracts excise of
$51.28 per litre under Article 2 H of the Schedule to the
Excise Tariff Act 1921.
Under the current law, imported wine which complies with
Additional Note 3 of Chapter 22 (the note) only attracts a customs
duty of 5 percent. This note specifies that wine for the purposes
of Chapter 22 is, amongst other things, a beverage with an alcohol
content of more than 1.15 percent. Currently, the note does not
contain a threshold after which imported wine may be taxed
differently. As a result, unlike the locally produced counterpart,
imported wine with more than 22 percent alcohol continues to
attract the lower customs duty.
Item 1 of the Bill will make changes to
paragraph (a) of Additional Note 3,
Chapter 22 of the CTA, introducing the threshold of 22
percent into this paragraph. As the result, when exceeding this
threshold, imported wine will lack compliance with Additional Note
3 and attract a customs duty equivalent to the excise applicable to
locally produced wines with an alcohol content of more than 22
This measure proposes changes to tariff applicable to certain
grape wine products (GWPs). GWPs are defined in Additional Note 4,
Chapter 22 of the CTA and include products such as vermouth or
marsala, but, according to the
Explanatory Memorandum, also certain wine based cream beverages
(Irish Cream products).(1)
Under the current regime, imported and locally produced Irish
Cream products attract different taxes and duties: imported Irish
Cream products are taxed applying the relevant custom duties to the
respective product under Chapter 22 of the CTA; locally produced
Irish Cream products attract wine equalisation tax (WET) under the
A New Tax System (Wine Equalisation Tax) Act 1999.
Item 2 and 3 propose to repeal
and substitute the descriptions contained in column 2 of
subheadings 2206.00.30 and 2206.00.4, inserting new paragraphs (b).
The result of this amendment will be that imported Irish Cream
products will, as their locally produced counterparts, attract WET
and any relevant customs duty.
According to the
Explanatory Memorandum to this Bill, these measures aim at
business input costs, increase the international
competitiveness of Australian business, and encourage investment in
efficient and sustainable industries.(2)
Current item 19 of Schedule 4 of the CTA applies to certain
goods which have been exported to another country and are now to be
imported back into Australia. If their identity has not been
altered since the date the goods were exported from Australia any
cost of materials, labour and other charges involved in the repair
of the good currently attracts a customs duty of 3 percent.
Item 4 of the Bill proposes to repeal this tariff
set out in item 19 of Schedule 4
for the CTA and to replace it with a tariff of free .
Item 5 of the Bill proposes to repeal item 50
of Schedule 4 of the CTA and to replace it with new item
50. This new item will provide that goods, to which,
according to a Tariff Concession Order, item 50(1) in Schedule 4 of
the CTA applies, attract a customs duty of free . This general
provision, however, does not apply to goods which are classified
under heading 3819.00.00, ie. goods which can be classified as
certain types of hydraulic brake fluids.(3) These goods
will attract a customs duty of free only if they have been exempt
from the Product Stewardship Oil Levy by the Minister administering
the Environment Protection and Biodiversity Conversation Act
1999. If this exemption has not been granted, the goods will
still attract the Waste Oil Levy.
Should item 50 be passed as proposed, its scope will be much
broader, encompassing goods which are currently covered item 50A in
Schedule 4 of the CTA. As a result, current item 50A will become
obsolete and consequently, item 6 proposes to
repeal this item.
Item 7 proposes to make transitional
arrangements to preserve the applicability of the law as it
currently stands to Tariff Concession Orders in effect prior to the
passing of these amendments.
Explanatory Memorandum quantifies the financial impact of the
above measures as follows:(4)
Taxation of locally and imported grape wine products whilst
difficult to quantify, the government expects that the measure may
result in a small increase in Government revenue
Taxation of certain wine based cream beverages the government
expects the financial impact of this measure to be negligible,
Certain goods subject to Tariff Concession Orders it is expected
that this measure will result in a duty forgone amounting to:
Explanatory Memorandum to the Customs Tariff Amendment Bill
(No. 2) 2005, p. 4.
ibid., p. 5.
Item 3819.00.00 applies to Hydraulic brake fluids and other
prepared liquids for hydraulic transmission, not containing or
containing less than 70% by weight of petroleum oils or oils
obtained from bituminous minerals .
Explanatory Memorandum, op. cit., p. 2.
16 August 2005
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