Last evening (a little earlier than usual) the Australian Federal Government released its Budget for the financial year 2016/2017. Given the likely proximity of the federal election it is unsurprising that the budget focussed on measures which the Government believes will attract support in the electorate. However, there still remains some issues of interest for those in the customs and international trade industry.
- There has been provision for additional funding of $69.9M over 4 years to advance the Australian Trusted Trader Program (ATTP) beyond its current pilot program. This follows the recent announcement that 4 companies have entered into formal Trusted Trader Agreements and the increased funding will allow for the continued extension of the ATTP
- The announcements on the ATTP also included some detail on benefits available to members of the ATTP including the ability to defer payment of customs duty from payment at the time of importation to payment on a monthly basis. This is a significant benefit for members of the ATTP who will also benefit from periodic and streamlined reporting and streamlined clearance of goods
- GST will be extended to low value import transactions from 1 July 2017 so that both customs duty and now GST will be payable on all such transactions which currently are not subject to customs duty and GST. This also means that overseas suppliers with Australian turnover of at least $75K will be required to register for, collect and remit GST for such low value transactions.
- Tobacco excise and excise – equivalent customs duties will be subject to four annual increases of 12.5% per annum from 2017 to 2020 in addition to the existing indexation according to Australian Weekly Earnings based on ordinary time earnings. This will increase the tax to 69% of the average price of a cigarette close to the 70% recommended by the WHO. This will lead to a significant increase in revenue collected by the DIBP which more than compensates for the reduction in the collection of revenue due to the increase in FTAs. There has also been an announcement of a reduction in duty free allowance for cigarettes. However, no doubt the increase on taxes this will lead to an increase in efforts to avoid these tax increases by illicit means. This will be addressed by changes to legislation to increase enforcement options to the DIBP including new offences and penalties as well as additional funding of $7.7M over 2 years for the Tobacco Strike Team
- The Government will reduce tariffs on IT products from 1 January 2017 in accordance with obligations pursuant to the WTO IT Agreement.
- A reduction in the WET rebate cap from $500,000 to $350,000 and a tightening in the eligibility criteria for the rebate. This follows concerns on use of the WET rebate
- A limited excise refund scheme for distillers and producers of low strength fermented beverages (including vodka and gin) will be introduced from 1 July 2017 to assist the local industry
- A strengthening of Transfer Pricing Rules to incorporate OECD Guidelines relating to IP and intangibles and to ensure that transfer pricing analysis should reflect the economic substance of transactions from 1 July 2016. This will no doubt reduce the ability to effect such Transfer Pricing arrangements and also affect customs duty adjustments
- Additional funding of the DFAT FTA portal of $1.8M over four years
- Accelerating "Landing Pad" funding for Berlin and Singapore for those seeking investment and export opportunities in those cities
- New funding of $5.3M over 4 years for a new Austrade facility in Tehran
- Funding for increased diplomatic operations for consulates in PNG, China and the Ukraine
All in all much of the Budget has been given over to election issues with only a relatively lesser contribution to customs and trade issues, other than the ATTP and funding for overseas outposts to assist exporters. I would anticipate significant additional commitments to trade and customs issues in the pre – election announcements and commitments of the political parties.
Details of the ECA media release on the Budget can be found here.