EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 63
Tradex Scheme Act 1999
Tradex Scheme Amendment Regulations 2011 (No. 1)
Issued by the authority of the Minister for Innovation, Industry, Science and Research.
Section 49 of the Tradex Scheme Act 1999 (the Act) provides, in part, that the Governor-General may make regulations prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for giving effect to the Act.
Introduced in 2000, the Tradex Scheme (Tradex) provides access to up-front exemption from duties imposed by the Customs Tariff Act 1995 for imported goods that are subsequently exported, provided the goods are not inappropriately used or consumed while in Australia. Tradex also provides those goods with access to exemptions from certain other taxes, including the Goods and Services Tax. This is consistent with the international taxation principle that taxes should apply in the country of consumption.
The Regulations amend the Tradex Scheme Regulations 2008 (the Principal Regulations) removing some uncertainty that existed around one provision.
The Act and the Principal Regulations were amended in 2008 to implement Tradex-related recommendations from the Review of the Tradex and Manufacturing in Bond Schemes and four post-review proposals. The amendments ensured that Tradex is consistent with the Drawback provisions in the Customs Regulations 1926 without being dependant on them, and clarified some administrative changes to the scheme.
As a result of the approach taken to drafting the Principal Regulations, beneficial treatment of goods not exported due to loss or wastage during processing was uncertain with respect to mixed and unmixed goods. In particular, it was not clear that remission of tradex duty was permitted with respect to loss or wastage on goods that are processed or treated in Australia but are not mixed with other goods prior to export.
The 2008 Tradex changes were simply administrative in nature and not intended to affect the scope of beneficial treatment under the program. The Regulations make it clear that remission of tradex duty is permitted with respect to loss or wastage on all goods that are processed or treated in Australia prior to export, provided they are not consumed or used.
This issue related to a very small component of the program. It had not significantly affected the program’s administration or impacted on duty forgone. The Regulations clarify the scope of beneficial treatment to ensure it is consistent with the policy intent of the program. It also simplifies the Principal Regulations for users and administrators of the scheme.
Details of the Regulations are included in the Attachment.
The Regulations are taken to have commenced on 8 October 2008. Advice from Office of Legislative Drafting and Publishing of the Attorney-General’s Department indicated this does not contravene 12(2) of the Legislative Instruments Act 2003. The effect of the retrospectivity is that no rights are affected adversely and no liabilities are imposed. The changes clarify the eligibility for a benefit with respect to mixed and unmixed goods for some Tradex users.
The Regulations are a legislative instrument for the purposes of the Legislative Instrument Act 2003.
Attachment
Details of the Tradex Scheme Amendment Regulations 2011 (No. 1)
Regulation 1 – Name of the Regulations
This regulation provides that the title of these Regulations is the Tradex Scheme Amendment Regulations 2011 (No. 1)
Regulation 2 – Commencement
This regulation provides that these Regulations are taken to have commenced on 8 October 2008.
Regulation 3 – Amendment of Tradex Scheme Regulations 2008
This regulation provides that the Tradex Scheme Regulations 2008 are amended as set out in the Schedule.
Schedule – Amendments
Item [1] regulation 5
This regulation substitutes the previous regulation 5 with new regulation 5 and 5A.
The previous regulation 5 clarified how goods considered to be mixtures were treated with respect to the liability to pay tradex duty in certain circumstances and the remission of tradex duty when considered appropriate by the Secretary of the Department of Innovation, Industry, Science and Research. Tradex duty is payable by the importer if goods imported under Tradex are not exported in the specified time. It is an amount equivalent to the Customs duty that would have been payable on the goods at the time they were imported, if those goods had not been entered under a tradex order.
New regulation 5 clarifies the need to pay tradex duty on goods entered under a tradex order that were not processed or treated in Australia and not exported. New regulation 5A clarifies the need to pay tradex duty on goods entered under a tradex order that are processed or treated in Australia but are not exported. It also provides for circumstances under which Secretary of the Department of Innovation, Industry, Science and Research may remit tradex duty. These amendments make it clear that remission of tradex duty is permitted on loss or wastage in respect of goods processed or treated in Australia prior to export, provided those goods are not consumed or used in Australia.
Item [2] paragraph 8(1)(d)
Regulation 8 clarifies the circumstances under which the Tradex user will be liable to pay tradex duty if the imported goods are consumed or used. It retains the interpretation of consumed and used for the purposes of Tradex.
The amendment to paragraph 8(1)(d) is a technical amendment reflecting the substitution of regulation 5 with proposed new regulations 5 and 5A, and the new language associated with that change. It effectively provides that processing or treating goods in Australia does not constitute consumption or use, in the same way that the previous regulations provided that mixing goods did not constitute consumption or use.