EXPLANATORY STATEMENT
INSTRUMENT OF REVOCATION NO. 1 (2008)
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. The Customs Tariff Act 1995 (the Tariff Act) is a Customs Tariff for the purposes of the Act.
Item 32B of Schedule 4 to the Tariff Act provides that the following goods are dutiable at the rate of “Free”:
Goods, as prescribed by by-law, which in the opinion of the Chief Executive Officer, the amount of duty that, but for this item, would be payable and the value are insubstantial.
One of the by-laws made for the purposes of item 32B is By-law No. 9740019. This by-law is known as the ‘gift concession’ and prescribes for item 32B certain goods as follows:
…….. unsolicited gifts of a non-recurring nature sent to an individual in Australia by or on behalf of an individual outside Australia, being goods, or part thereof, to a maximum value of $200 per consignment. For the purposes of this by-law, "goods" does not include:
(a) tobacco products, as follows;
(i) in excess of 250 cigarettes; OR
(ii) in excess of 250 grams of cigars or tobacco products, other than cigarettes;
(b) alcoholic liquor in excess of 1 litre;
(c) goods imported by a passenger arriving in Australia from overseas;
(d) goods imported by a member of the crew of a ship or aircraft arriving from overseas; OR
(e) goods forming part of a bulk order placed on the overseas supplier.
Since October 2005, usage of the gift concession has significantly decreased following the introduction of a uniform duty and tax free threshold for all imported goods (except for alcoholic beverages and tobacco products) up to a value of $1,000.
The gift concession also highlights an inconsistency in the tax treatment of imported alcoholic beverages and tobacco products. While such products are excluded from import concessions under the uniform import threshold for goods, they remain eligible for duty and tax exemptions under the gift concession.
To remove this inconsistency, Customs has revoked the gift concession (by-law number 9740019) with effect from 1 October 2008.
Instrument
CEO Instrument of Revocation No. 1 (2008) revokes By-law No. 9740019.
Consultation
No consultation was undertaken under section 17 of the Legislative Instruments Act 2003 before this instrument was made as it is of a minor or machinery nature and does not substantially alter existing arrangements.
Commencement
CEO Instrument of Revocation No. 1 (2008) commences on 1 October 2008.
Overview
The Customs Act 1901, enacted by the Australian Parliament, provides the framework for the regulation of goods entering and leaving the country, including the imposition of customs duties. One specific aspect of the Act, outlined in section 271, allows the Chief Executive Officer of Customs to create by-laws for certain items listed in the Customs Tariff, as defined in section 4 of the Act. One such by-law, known as the 'gift concession', prescribed certain goods that were exempt from duty if they met particular criteria, such as being unsolicited gifts of a non-recurring nature sent to an individual in Australia with a maximum value of $200 per consignment. However, following the introduction of a uniform duty and tax-free threshold for all imported goods in October 2005, the usage of the gift concession significantly decreased. Additionally, the concession highlighted an inconsistency in the tax treatment of imported alcoholic beverages and tobacco products. To address this inconsistency, the Chief Executive Officer of Customs revoked the gift concession (by-law number 9740019) with effect from 1 October 2008, as outlined in the CEO Instrument of Revocation No. 1 (2008).
Scope and Application
The Customs Act 1901 applies to individuals, entities, and industries involved in the importation of goods into Australia, regulating the duties and taxes applicable to such goods. The Act empowers the Chief Executive Officer of Customs to create by-laws for specific items within the Customs Tariff, including the application of duty to certain goods. One such by-law, By-law No. 9740019, established the 'gift concession', which exempted unsolicited gifts of a non-recurring nature sent to individuals in Australia, valued up to $200 per consignment, from duty. This concession had exclusions for certain quantities of tobacco products, alcoholic liquor, and goods imported by overseas passengers or crew. However, this by-law has been revoked by CEO Instrument of Revocation No. 1 (2008), effective from 1 October 2008, due to the introduction of a uniform duty and tax-free threshold for imported goods, reducing the need for the concession and addressing inconsistencies in the tax treatment of alcoholic beverages and tobacco products.
Key Provisions
The primary operative section in this instrument is CEO Instrument of Revocation No. 1 (2008), which revokes By-law No. 9740019, known as the ‘gift concession’. This by-law was previously made under section 271 of the Customs Act 1901 and dealt with certain goods that were dutiable at the rate of “Free” if they were unsolicited gifts of a non-recurring nature sent to an individual in Australia by or on behalf of an individual outside Australia, provided the value was up to $200 per consignment (section 271(1)). The revocation of this by-law removes the specific exemption for these goods, aligning the duty treatment of such items with the general threshold of $1,000 for imported goods.
The Customs Act 1901, as amended by this revocation, now imposes the standard duty and tax rates on unsolicited gifts of the specified type and value, aligning them with other imported goods. This means that any unsolicited gifts sent to individuals in Australia, whether from outside Australia or not, will be subject to the same duty and tax rates as other imported goods, unless they fall under other specific exemptions or concessions. The revocation also removes the exceptions previously allowed for tobacco products, alcoholic liquor, and goods imported by passengers or crew members.
In terms of obligations and requirements, the revocation places a duty on the Chief Executive Officer of Customs to enforce the standard duty and tax rates on unsolicited gifts sent to individuals in Australia, with a maximum value of $200 per consignment. This means that individuals receiving such gifts must now account for the duty and tax, which will be calculated based on the general duty and tax rates applicable to imported goods. The revocation also imposes a requirement on senders to be aware of the changes and ensure compliance with the new duty and tax obligations.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the explanatory statement for breaching the provisions of this revocation. However, any breach of the Customs Act 1901 in relation to the importation of goods, including the failure to pay duty and tax on unsolicited gifts, may result in penalties as outlined in the Act. Generally, the Act provides for both civil and criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach. The maximum penalties for customs offences can vary widely, but may include fines up to several thousand dollars and imprisonment for several years in more serious cases.