Tobacco and Revenue Offences

Tobacco and Revenue Offences

The importation and subsequent sale of tobacco is a significant source of revenue for the Australian Government. Accordingly, the Commonwealth Director of Public Prosecutions forcefully prosecutes any person who illegally imports tobacco, thus avoiding paying tax. Prison sentences do apply, as do restraining order and confiscation proceedings in relation to money or property suspected as having been paid for using the proceeds of crime (or which reflect “unexplained wealth”). To properly represent those charged with these offences, a familiarity with the Customs Act, Commonwealth Criminal Code and the relevant confiscation legislation is essential.

Changes to Tobacco Importation Offences in Australia

In July 2019 the Australian Government made significant changes the tobacco importation process. These changes saw the tightening of tobacco product regulation, whereby most tobacco products were reclassified as ‘prohibited imports’. These procedural changes included tighter regulations on the importation of cigarettes, molasses tobacco, heat-not-burn products and loose-leaf tobacco. Under these changes individuals or organisation importing tobacco, or tobacco products, must apply for and be granted a permit issued by the Australian Border Force (pursuant to Home Affairs notice No. 2019/13). Furthermore, once the tobacco arrives in Australia, importers are required to pay customs duty and taxes to the Department of Home Affairs, including their Australian Border Force division (Home Affairs). These changes come in light of a Federal Inquiry into the illicit tobacco trade.

Criminal Offences

The illicit trade and sale of fraudulent tobacco products is considered a serious crime. Although most commonly associated with manufacturing and distribution, importation of tobacco products is also considered illicit where the aforementioned processes have not been followed. There are extensive penalties for breaching these processes, including: a civil penalty by way of $44,000 infringement notice for possessing between two and five kilograms of illicitly imported tobacco; a criminal penalty of up to five years imprisonment and/or a $222,000 fine for more possessing more than five kilograms of illicit tobacco or; for selling illicitly obtained tobacco and; up to 10 years imprisonment and a $333,000 fine for the production of illicit tobacco.

Furthermore, Section 233 BABAD of the Customs Act outlines offences involving the importation of tobacco products. Such offences relate to importing tobacco products with the intent of fraudulent or unregulated sales. Subsection (1) prescribes a maximum penalty of 10 years in prison for ‘importing tobacco goods’ with ‘the intention of defrauding the revenue’. This section would apply in situations where a person has not followed the ABF’s permit and declaration procedure, or if tobacco was distributed through the mail. Subsection (2) sets the same maximum penalty for possessing or conveying tobacco products in the knowledge that they were imported with the intention to defraud the revenues. This subsection would apply where a person has received or transported tobacco products with knowledge that duties and taxes had not been paid. In addition to prison, those in breach of subsection (1) or (2) may face a maximum fine of $210,000.

‘Reckless’ Importation

Subsection (2A) prescribes a maximum penalty of five years imprisonment for importing tobacco products in circumstances where the person is reckless as to whether there would be a defrauding of the revenue. An individual is considered as ‘reckless’ if they were aware it was likely that there would be a defrauding but went ahead with their actions regardless. Subsection (2B) sets the same 5-year maximum penalty for possessing or conveying tobacco products where the person is reckless as to whether they were imported with the intention to defraud the revenue. Again, the same standard for ‘reckless’ applies.

If you have been charged with a criminal offence relating to illicit tobacco importation, Galbally Parker can assist you.