Our estimates of the duty evaded include work done by us, the Australian Border Force (ABF) and other government agencies to combat illicit tobacco.
Illicit Tobacco Taskforce
On 1 July 2018, the Illicit Tobacco Taskforce (ITTF) was established as part of new reforms. Under the combined power of these government agencies, the ITTF fights back against organised criminals operating multimillion dollar crime syndicates in the shadow economy.
The ITTF draws on the expertise and advanced capabilities of the:
- ATO
- ABF
- Department of Home Affairs
- Australian Criminal Intelligence Commission (ACIC)
- Australian Transaction Reports and Analysis Centre (AUSTRAC)
- Commonwealth Department of Public Prosecutions (CDPP) and law enforcement partners.
In its first 3 years, the ITTF seized more than 264 tonnes of illicit tobacco and 540 million cigarettes, with an estimated excise value of over $870 million. This demonstrates how effectively the partner agencies work together to stamp out illicit tobacco.
The ITTF uses enhanced investigative and intelligence gathering methodologies to disrupt illicit activity by:
- targeting international and domestic supply chain vulnerabilities through enhanced data analysis and identifying Priority Illicit Tobacco Networks using a counter networking approach
- targeting the criminal economy and responding to large profits realised by organised criminals in cooperation with the Criminal Assets Confiscation Taskforce and the Serious Financial Crime Taskforce
- using specialist law enforcement capabilities
- using the data-mining and financial analysis capabilities of AUSTRAC and the ATO to trace illicit financial flows from domestic and international trafficking
- working closely with the CDPP to prepare cogent briefs of evidence in both the criminal and civil (proceeds of crime) jurisdictions
- working with domestic and international law enforcement and customs bodies to leverage additional capabilities and support.
ITTF's achievements demonstrate the effectiveness of Australia's enhanced approach in tackling illicit tobacco in the community. To guide our approach, we use the experiences of other countries including the United Kingdom, the strategic insights of ACIC and the findings of the Shadow Economy Taskforce.
ATO Domestic Illicit Tobacco response
Complementing our support to the ITTF, we conduct additional operations to seize and destroy domestically grown and manufactured illicit tobacco crops. No licenses have been issued to manufacture tobacco domestically since 2015.
We receive referrals from the ITTF and state law enforcement partners and tip-offs from industry and the community.
Between 1 July 2018 and 30 June 2024, our Illicit Tobacco Team completed 90 operational activities. These included 19 ITTF (whole of government) operations, 31 ATO specific operations and 40 state law enforcement support operations.
These operations resulted in:
- 627 acres of illicit tobacco crops located, seized and destroyed with a total weight of 3,746,240 kilograms
- 39,224 kilograms of loose-leaf tobacco located, seized and destroyed
- 21,759,340 cigarettes located, seized and destroyed
- total estimated equivalent tobacco duty foregone value of above $723 million
- started prosecutions utilising new offence provisions in schedule 308B Tax Administration Act.
The domestic response also includes some small funding for ATO auditors who support the ITTF with the financial analysis relating to Priority Illicit Tobacco Network Targets.
Tobacco legislation
On 16 August 2018, the government passed the Treasury Laws Amendment (Illicit Tobacco Offences) BillExternal Link. It created a new tobacco offence regime and increased the penalties to provide a greater deterrence to illegal activity.
The penalty is calculated in multiples of a penalty unit.
This new offence legislation under Division 308 of the Taxation Administration Act 1953 (Cth) has been used widely to further illicit tobacco operations. Results of the previously mentioned 74 operational activities include:
- 44 briefs of evidence being referred to the Commonwealth Director of Public Prosecutions
- 27 convictions in relation to tobacco related offending
- 9 prosecution matters still proceeding through the court system.
Sentences have ranged from 4 months imprisonment (suspended for 12 months conditional on good behaviour) to 3 years imprisonment (eligible for parole after 2 years and 3 months).
Communication approaches
Our communication approach focuses on the ATO (and other partner agencies under the ITTF) to demonstrate our effectiveness in dealing with domestically grown and manufactured illicit tobacco.
We use a range of communication tactics, including media releases, to let people know about the risks of being associated with the illicit tobacco trade. This increases community awareness and ensures people continue to refer illicit tobacco crops to state or federal law enforcement agencies or the ATO.
We also use targeted communications to inform the community about key risk areas including known tobacco growing hotspots, criminal prosecutions and even the involvement of Serious Organised Crime. We also promote the important work of the ITTF and ATO in undertaking search warrants, crop destruction as well as crop to shop strategies to address illegal tobacco in retail stores.