Customs will never dominate the headlines on Australian
budget night, but this does not mean that there are not measures in
the budget that impact the customs and global trade community.
Buried away in the budget papers are increases in penalties,
increases in fees paid by importers and interesting predictions
about the level of duty collections over the next 4
A quick review of the budget papers reveals the following 10
relevant trade related measures:
Penalties to increase – Fines for most
customs offences are measured in penalty units. The amount of
penalty units will increase from $170 per unit to $180 per unit
from 31 July 2015. Most infringement notices for companies are set
at 45 penalty units, meaning a $450 increase in penalties for most
strict liability offences.
Impact of FTAs - Customs duty on items other
than fuel, alcohol and tobacco is estimated to fall from $2.95
billion in 2014-15 to $1.72 billion in 2018-19. Most of this fall
can be attributed to duty savings under the China, Japan and Korea
FTAs with the balance relating to the drop in the rate on clothing
and textiles from 10% - 5% on 1 January 2015.
Duty on vehicles – We may not have a
local industry in 2019 but we are still expected to have customs
duties. Estimates of duty in 2018/19 on passenger motor vehicles is
$450 million. This seems a high amount for consumers to pay to
protect a local industry that will have left the country by
Trusted trader - The Government has announced
$5.6 million of funding for the development of the Trusted Trader
program. The pilot for this program is set to commence in July
2015. It will initially comprise of only 4 sea freight exporters
but will expand over 40 participants of the following 12 months.
There was no detail in the budget of the revenue measures
associated with this program, such as duty deferral.
Taxing of multinationals - The Government will
target 30 multinationals which it is alleged are involved in profit
shifting. Profits can be shifted via a variety of methods. Where
those methods relate to the cost of goods (such as overcharging) or
the payment of royalties or license fees, reversing those profit
shifting strategies may have customs implications. The relationship
between customs duty and transfer pricing has always been
difficult, and this budget promises to put the issue again in the
FTA promotion - Expect to hear a lot about the
recent FTAs with the Australian Trade Commission and DFAT receiving
an increase of $25 million over the next two years to promote
Managing Biosecurity Risks - The Department of
Agriculture will receive increased funding to manage the risks of
an increasingly complex global supply chain. Increased activities
will include assessing and auditing offshore supply chains and
increased surveillance of sea and air cargo terminals.
Import processing charge - The Government
expects that changes to the import processing charge will result in
additional revenue of $107 million over 4 years. Part of the
changes will cover trade related reform (presumably the Trusted
Trader program), remove different charges based on post/air/sea and
increase the cost of manual declarations.
Broker licence charges - License charges for
brokers, depots and warehouses will be restructured with increased
licence renewal charges and a new warehouse licence variation
charge. These new charges will commence from 1 January 2016.
Australian Border Force – The major
customs development was announced last budget with the merging of
Customs and Immigration. The Government is banking on the new
Department of Immigration and Border Protection to be efficient. It
has budgeted savings of over $40 million per year to be achieved by
The budget shows a trend - importing goods is becoming less
about payment of duty. It is budgeted that non-excise equivalent
duty will fall by nearly 50% over the next 4 years. At the same
time we will see other charges increase, such as import processing
charges, license fees and penalties.
The decrease in duty does not mean that the role of a broker is
any easier. However, when there is less duty to manage it does
become harder to demonstrate the benefits to clients. One outcome
of increased compliance activities and the proposed introduction of
the Trusted Trader Program is that a high level of trade compliance
will be rewarded, even if it does not have a duty impact.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
There has been a range of recent legal developments that affect privacy, child abuse claims and workers compensation.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).