Department of Immigration and Border Protection (DIBP) Notice 2017/25 sets out the new rates of excise-equivalent customs duty on tobacco and tobacco products, operative from 1 September 2017.

The Customs Tariff Amendment (Tobacco Duty Harmonisation) Act 2017 (the Amendment Act) received the Royal Assent on 15 August 2017, and will commence on 31 August 2017. The Amendment Act separates the indexation provisions for tobacco products subject to a ‘per stick’ rate from the indexation provisions for tobacco products subject to a ‘per kilogram’ or ‘per kilogram of tobacco content’ rate. The indexation provisions are outlined below.

Indexation provisions for tobacco products subject to a ‘per stick’ rate

Section 19AC of the Customs Tariff Act 1995 (Customs Tariff Act) provides for the excise-equivalent customs duty rate applied to tobacco products classified to tariff subheadings where the amount of customs duty is determined on a ‘per stick’ basis to be indexed biannually, in March and September, to the average weekly ordinary time earnings (AWOTE). In addition, from 1 September 2016 until 1 September 2020, an additional indexation factor of 12.5 per cent is applied to the September indexation subsequent to AWOTE indexation.

Indexation provisions for tobacco products subject to a ‘per kilogram’ or ‘per kilogram of tobacco content’

The Amendment Act inserts Section 19ACA. This section applies to tobacco products classified to tariff subheadings where the amount of excise-equivalent customs duty is determined on a ‘per kilogram’ or ‘per kilogram of tobacco content’ basis. This section provides for the excise-equivalent customs duty rate applied to these goods to be adjusted biannually in March and September at the same time that the ‘per stick’ rate is indexed. The new rate will be determined by dividing the ‘per stick’ rate by the weight conversion factor that applies for the 12 month period commencing on 1 September of the relevant year.

Equivalent amendments were made to the Excise Tariff Act 1921.

The adjusted rates discussed above also apply to goods subject to indexation in:

  • Schedule 5 (US originating goods)
  • Schedule 6 (Thai originating goods)
  • Schedule 7 (Chilean originating goods)
  • Schedule 8 (ASEAN-Australia-New Zealand originating goods)
  • Schedule 9 (Malaysian originating goods)
  • Schedule 10 (Korean originating goods)
  • Schedule 11 (Japanese originating goods) and
  • Schedule 12 (Chinese originating goods) in the Customs Tariff.

Table 1: Customs Tariff Act 1995 – Tariff Subheadings Affected by 1 September 2017 AWOTE Indexation

Customs Tariff Subheading

New Rates of Duty Operative from

1 September 2017

2401.10.00

AUD $901.39/kg

2401.20.00 2403.11.00

2401.30.00 2403.19.90

2402.10.80 2403.91.00

2402.20.80 2403.99.80

AUD $901.39/kg of tobacco content

2402.10.20 2403.19.10

2402.20.20

AUD $0.69858/stick

Table 2: Excise Tariff Act 1921 – Excise Items Affected By 1 September 2017 AWOTE Indexation

Excise Tariff Item / Subitem

New Rates of Duty Operative from

1 September 2017

5

Tobacco, cigars, cigarettes and snuff

5.1

AUD $0.69858 per stick

5.2

AUD $901.39 per kilogram of tobacco content