Customs By-law No. 0540003

Administered by Attorney-General's Department

Legislation au F2005L03056 ByLaws Not in force Legislative Instrument

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EXPLANATORY STATEMENT

By-law No. 0540003

Customs Act 1901

Background

Section 271 of the Customs Act 1901 (the Act) provides, in part, that where an item of a Customs Tariff is expressed to apply to goods, or to a class or kind of goods, as prescribed by by-law, the Chief Executive Officer of Customs may make by-laws for the purposes of that item. A Customs Tariff is defined in section 4 of the Act to mean an Act imposing duties of customs, that is the Customs Tariff Act 1995 (the Customs Tariff Act)..

Item 32A of Schedule 4 to the Customs Tariff Act provides that the following goods are dutiable at the rate of ‘Free’:

Goods, as prescribed by by-law, on which no duty is payable and in respect of which, in the opinion of the Chief Executive Officer, the value is insubstantial

By-law No. 0040019 previously prescribed for the purposes of item 32A:

a) goods imported by post, the total value of which does not exceed $1,000; and

b) goods imported otherwise than by post the total value of which does not exceed $250;

and in respect of which the GST payable does not exceed $50.

By-law No 0040019 has been revoked and replaced with By-law No. 0540003.

The new by-law prescribes for the purposes of item 32A goods imported into Australia, the customs value of which does not exceed $1,000. The new by-law aligns the threshold value of goods imported otherwise than by post, that is by sea and air, with the threshold value of goods imported by post. This means that all goods imported into Australia that have a value not exceeding $1,000 will be duty free. Under section 42-5 of the A New Tax System (Goods and Services Tax) Act 1999, such goods will also be GST free. However, this by-law does not apply to:

a) tobacco, tobacco products or alcoholic beverages;

b) goods imported by a passenger or a member of the crew of a ship or aircraft arriving in Australia from a place outside Australia; or

c) goods forming part of a bulk order.

The new revenue collection threshold is also aligned with the new value threshold that determines whether imported goods must be the subject of a formal entry, which was amended by Customs Regulations Amendment 2005 (No. 6).

In regard to the new formal import entry threshold for the new Integrated Cargo System (ICS), the Government indicated its preference for a system that reduced, as much as possible, the ‘red tape’ associated with the importation of low value goods. The Government also made it clear that when consideration was given to the associated revenue collection threshold, it too should strike an appropriate balance between revenue collection, risk management and administrative efficiency.

The new threshold value applies to the goods that:

c) are on board a ship or aircraft that is due to arrive at its first port in Australia from a place outside Australia at or after the import cut-over time; or

d) were on board a ship or aircraft that has arrived at its first port in Australia from a place outside Australia if the ship or aircraft was due to arrive at that port or airport at or after the import cut-over time; or

e) are or were on board a ship or aircraft that arrives at its first port or airport in Australia from a place outside Australia at or after the turn-off time.

“Import cut-over time” and “turn-off time” have the same meaning as in section 5 of the Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Act 2004.

The new by-law will continue to apply the previous threshold values to goods that:

a) are on board a ship or aircraft that is due to arrive at its first port in Australia from a place outside Australia before the import cut-over time; or

b) were on board a ship or aircraft that has arrived at its first port in Australia from a place outside Australia if the ship or aircraft was due to arrive at that port or airport before the import cut-over time, unless the ship or aircraft arrives at or after turn-off time.

Instrument

By-law no. 0540003 prescribes goods for the purposes of item 32A of Schedule 4 to the Customs Tariff Act and revokes By-law No. 0040019.

Consultation

Any change to the revenue threshold affects importers and their agents, the industry sector managing the importation of goods into Australia (express couriers, freight forwarders, customs brokers, the Australian Postal Corporation). Customs has been in detailed consultation about the threshold with stakeholders since early 2004.

The Customs National Consultative Committee, comprising representatives of major industry stakeholders, meets quarterly to discuss Customs legislative and administrative issues, and has received regular updates on threshold developments.

The requirement for a revenue threshold is integral to the import module of the Integrated Cargo System (ICS). As part of the rollout of the ICS, the Minister for Justice and Customs has held a quarterly roundtable meeting with industry representatives. Discussion of the revenue threshold was an agenda item at these meetings, and industry was kept informed of the requirement for the Government to consider the administrative and revenue implications of a changed threshold.

Customs (along with the Australian Quarantine and Inspection Service) meets quarterly with the Australia Postal Corporation as part of a tripartite agreement. Customs has had ongoing discussions among this group about business process matters, including workload implications under a changed revenue threshold.

Once a preferred position was arrived at for the revenue threshold the Commonwealth Government consulted with the State and Territory Governments about the impact on Goods and Services Tax revenue.

Aligning the revenue collection threshold directly with the new formal entry import threshold promotes a significant reduction in ‘red tape’ for a large number of importers and other stakeholders involved in the importation of goods. It treats all modes of transport into Australia in the same manner and results in a transparent method of calculating customs duty and GST.

Commencement

By-law No. 0540003 commences on 8 October 2005.

Overview

The Customs Act 1901 was enacted to facilitate the regulation of imports and exports, ensuring the collection of duties and taxes on goods entering and leaving Australia. By-law No. 0540003, introduced under this Act, specifically addresses the problem of overly complex regulations for low-value imported goods. This by-law aims to streamline customs procedures and reduce administrative burdens for importers and other stakeholders by setting a uniform threshold for duty-free goods. The by-law was developed following consultations with various industry stakeholders, including the Customs National Consultative Committee, express couriers, freight forwarders, and customs brokers, to ensure the changes would effectively balance administrative efficiency, revenue collection, and risk management. It revokes the previous by-law No. 0040019 and establishes a new threshold for duty-free goods, aligning it with the formal entry import threshold, effective from 8 October 2005. This legislative change aims to create a more efficient and less cumbersome customs process for low-value goods, facilitating smoother trade operations while maintaining revenue integrity.

Scope and Application

By-law No. 0540003, issued under Section 271 of the Customs Act 1901, prescribes goods that are exempt from customs duty for the purposes of item 32A of Schedule 4 to the Customs Tariff Act 1995. It applies to goods imported into Australia with a customs value not exceeding $1,000, thus aligning the duty-free threshold for goods imported by post with those imported by other means. This by-law applies to all entities involved in the importation of goods into Australia, such as express couriers, freight forwarders, customs brokers, and the Australian Postal Corporation, but excludes tobacco, tobacco products, alcoholic beverages, and goods imported by passengers or crew members. Furthermore, it does not apply to goods forming part of a bulk order. The new threshold is designed to reduce administrative burdens and streamline the process for importing low-value goods, aligning with the new formal entry import threshold under the Integrated Cargo System (ICS). The by-law commenced on 8 October 2005, and its implementation involved extensive consultation with industry stakeholders and state and territory governments to ensure a balanced approach to revenue collection, risk management, and administrative efficiency.

Key Provisions

The primary sections of By-law No. 0540003 (F2005L03056) revolve around the prescription of goods for the purposes of item 32A of Schedule 4 to the Customs Tariff Act. This by-law, which replaces By-law No. 0040019, specifies that goods imported into Australia, with a customs value not exceeding $1,000, are duty-free under section 271 of the Customs Act 1901. This new provision aligns the threshold for duty-free goods, regardless of whether they are imported by post, sea, or air, at the same $1,000 value. The by-law explicitly excludes certain goods such as tobacco, tobacco products, alcoholic beverages, goods imported by passengers or crew members of ships or aircraft, and goods that form part of a bulk order from its application. In terms of obligations and requirements, the Act mandates that importers and their agents must ensure that the goods they import fall within the prescribed parameters to benefit from the duty-free status. This involves accurate valuation of the imported goods and compliance with the stipulated exceptions. The by-law is integrated with the new formal import entry threshold under the Customs Regulations Amendment 2005 (No. 6), necessitating the alignment of administrative processes within the Integrated Cargo System (ICS). This integration is designed to streamline the importation process, particularly for low-value goods, thereby reducing the administrative burden on importers and customs officers. There are specific offences and penalties associated with non-compliance under the Customs Act 1901. If goods are falsely declared as being below the specified value to evade duty, or if an importer knowingly contravenes the provisions of the by-law, they may face criminal charges. The penalties for such offences can include fines and, in serious cases, imprisonment. For instance, knowingly making a false statement in a customs document can lead to a fine of up to $22,200 or imprisonment for up to two years, or both, as per section 245 of the Customs Act. Additionally, there are civil consequences for incorrect declarations, which can include the payment of outstanding duties and interest, as well as potential financial penalties. The by-law also affects the Goods and Services Tax (GST) framework. Under section 42-5 of the A New Tax System (Goods and Services Tax) Act 1999, goods that are duty-free under this by-law will also be GST-free. This alignment ensures that importers are not subjected to dual taxation on the same goods, provided they meet the value threshold and other criteria. The by-law's commencement on 8 October 2005 signifies the effective date from which these provisions apply, and it is crucial for all stakeholders to be aware of and comply with these updated regulations.

Area of Law: Customs Law
Instrument: By-law / Ordinance
Concepts: Definitions & Interpretation; Commencement Provisions; Prohibited Conduct

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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