House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 2 - Licensing for excise purposes

Outline of Chapter

2.1 This Chapter explains the changes to be made by this Bill to the regulation of certain activities relating to goods before the liability to excise duty is discharged. This includes activities relating to tobacco in the various forms it takes before it is manufactured into an excisable form.

Summary of the amendments

2.2 The amendments will replace the current rules about the registration of tobacco producers and dealers, the licensing of manufacturers of all excisable goods and the declaration of approved places with a comprehensive set of rules covering the licensing of persons to conduct these activities.

2.3 Existing Parts III and IV of the Excise Act 1901 (Excise Act) will be replaced by new Parts III, IV and IVA . [Schedule 1, items 26 and 27]

Detailed explanation of the amendments

2.4 Currently, the concept of a licence applies in the Excise context only in relation to the manufacturer of excisable goods. This Bill will extend that concept to other areas of activity that are regulated for the purposes of the Excise Act.

2.5 The term licence as it is used in the Excise Act will be defined in subsection 4(1) to cover:

•

a producer licence;

•

a dealer licence;

•

a manufacturer licence; and

•

a storage licence. [Schedule 1, item 6, definition of 'licence' in subsection 4(1)]

2.6 Licences, other than manufacturer licences, will have effect from the day they are granted and remain in force until they are cancelled. [Schedule 1, item 26, new subsection 39E(1)]

2.7 A manufacturer licence, will have effect from the day it is granted and remains in force until the following 31 December unless it is cancelled before then. [Schedule 1, item 26, new subsection 39E(2)]

2.8 A manufacturer licence can be renewed, on application by the licence holder, for the following year, unless there are grounds for cancelling the licence. [Schedule 1, item 26, new section 39F]

Manufacturing excisable goods

Licence to manufacture

2.9 A manufacturer of excisable goods (alcohol, tobacco and petroleum products) will continue to be required to be licensed.

2.10 A manufacturer licence is to be defined as a licence that authorises the holder to manufacture excisable goods [Schedule 1, item 11, definition of 'manufacturer licence' in subsection 4(1)] . The holder of such a licence will be referred to as a 'licensed manufacturer' in various sections of the Excise Act [Schedule 1, item 8, definition of 'licensed manufacturer' in subsection 4(1)] .

2.11 Increased penalties will apply for the manufacture of tobacco or other excisable goods without a licence. Section 35 of the Excise Act currently provides for a maximum penalty of $5,000. Proposed new section 25 provides for a tiered offence with substantially higher maximum penalties. If a person manufactures excisable goods without a licence and either:

•

knows the goods are excisable or is reckless as to whether they are excisable:

-

2 years imprisonment; and/or

-

the greater of 500 penalty units or 5 times the duty that would be payable if the goods had been entered for home consumption; or

•

irrespective of the person's state of mind - 100 penalty units.

[Schedule 1, item 26, new section 25]

Manufacturing in accordance with the Excise Act and the licence

2.12 A licensed manufacturer will continue to be required to manufacture their excisable goods in accordance with the Excise Act (which includes any relevant requirements or obligations in the Excise Regulations 1925 (Excise Regulations)) and in accordance with their licence (which may contain conditions). New section 26 replaces the corresponding limb of section 35 and provides for increased penalties for breaching this requirement in the same manner as provided for in new section 25 for manufacturing without a licence. [Schedule 1, item 26, new section 26]

Manufacturing only at licensed premises

2.13 A licensed manufacturer will only be permitted to manufacture excisable goods at premises specified in their licence. This requirement is the same as, and substitutes, that in section 45 of the Excise Act.

2.14 If a licensed manufacturer intentionally manufactures excisable goods at premises either knowing, or reckless as to whether, the goods are excisable, and either knowing, or reckless as to whether the premises are specified in their licence, they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years, or both. [Schedule 1, item 26, new subsection 27(1)]

2.15 A licensed manufacturer who manufactures excisable goods at premises not specified in their licence, will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 27(2) and (3)]

Producing tobacco seed, plant and leaf

License to produce

2.16 A person who wants to grow tobacco will be required to hold a 'producer licence'. A producer licence is to be defined as a licence that authorises the holder to produce tobacco seed, plant and leaf [Schedule 1, item 15, definition of 'producer licence' in subsection 4(1)] . The holder of such a licence will be referred to as a 'licensed producer' in various sections of the Excise Act [Schedule 1, item 9, definition of 'licensed producer' in subsection 4(1)] .

2.17 If a person intentionally grows tobacco, knowing that it is tobacco or is reckless as to whether it is tobacco, and does not hold a producer licence they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years, or both. [Schedule 1, item 26, new subsection 28(1)]

2.18 A person who grows tobacco without a producer licence will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 28(2) and (3)]

Production must be in accordance with the Excise Act and the licence

2.19 A licensed producer will be required to grow tobacco in accordance with the Excise Act and in accordance with their licence, which may contain conditions. New section 29 provides for a maximum penalty of 2 years imprisonment, 500 penalty units or both if the producer either knows or is reckless as to whether their production contravenes the Excise Act or their licence [Schedule 1, item 26, new subsection 29(1)] . A maximum penalty of 100 penalty units applies if the production of tobacco seed, plants or leaf contravenes the Excise Act or their licence, irrespective of their state of mind [Schedule 1, item 26, new subsections 29(2) and (3)] .

Production and storage only at licensed premises

2.20 A licensed producer will only be permitted to grow tobacco and to store tobacco seeds, plant and leaf at premises specified in their licence. Permission may be given, on application, to store tobacco seeds, plant or leaf at premises other than that specified in their licence. These requirements are the same as, and substitute, those in sections 29 and 30 of the Excise Act.

2.21 If a producer, without permission, intentionally stores tobacco seeds, plant or leaf, either knowing, or reckless as to whether, the material is tobacco, and either knowing, or reckless as to whether, the premises are specified in their licence, they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years or both. [Schedule 1, item 26, new subsection 30(1)]

2.22 A producer who stores tobacco seeds, plant or leaf at another site without permission will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 30(2) and (3)]

2.23 If a producer intentionally grows tobacco, either knowing, or reckless as to whether, it is tobacco, and either knowing, or reckless as to whether the premises are specified in their licence, they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years or both. [Schedule 1, item 26, new subsection 31(1)]

2.24 A producer who grows tobacco at another site will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 31(2) and (3)]

Record-keeping

2.25 A producer will be required to keep accounts and lodge returns in accordance with the Excise Regulations. This requirement is the same as, and substitutes, that in section 33 of the Excise Act. Division 1 of Part II of the Excise Regulations specifies the records a producer must keep.

2.26 Failure to comply with the requirement to keep records and lodge returns as prescribed is an offence which carries a maximum penalty of 30 penalty units. [Schedule 1, item 26, new section 32]

Access to licensed premises

2.27 Officers are to have access to the licensed premises of a licensed producer in order to monitor compliance with the Excise Act, including licence conditions and permissions. [Schedule 1, item 41, new subsection 86(3)]

Dealing in tobacco seed, plant and leaf

Licence to deal

2.28 A person who wants to buy and sell tobacco in the form of seed, plant or leaf will be required to hold a 'dealer licence'. A dealer licence is to be defined as a licence that authorises the holder to deal in tobacco seed, plant and leaf [Schedule 1, item 4, definition of 'dealer licence' in subsection 4(1)] . The holder of such a licence will be referred to as a 'licensed dealer' in various sections of the Excise Act [Schedule 1, item 7, definition of 'licensed dealer' in subsection 4(1)] .

2.29 If a person intentionally deals in tobacco seed, plant and leaf, either knowing, or reckless as to whether, it is tobacco seed, plant or leaf, and does not hold a dealer licence they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years, or both. [Schedule 1, item 26, new subsection 33(1)]

2.30 A person who deals in tobacco without a dealer licence will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 33(2) and (3)]

2.31 A licensed producer who transfers or acquires tobacco seed, plant or leaf in the course of their production will not be required to hold a dealer licence. [Schedule 1, item 26, new subsection 33(4)]

Dealing must be in accordance with the Excise Act and the licence

2.32 A licensed dealer will be prohibited from dealing in tobacco seed, plant or leaf except in accordance with the Excise Act and in accordance with their licence, which may contain conditions. New section 34 provides for a maximum penalty of 2 years imprisonment, a 500 penalty units fine, or both, if the dealer either knows or is reckless as to whether they are dealing in contravention of the Excise Act or their licence [Schedule 1, item 26, new subsection 34(1)] . A maximum penalty of 100 penalty units applies if their dealing in tobacco seed, plants or leaf contravenes the Excise Act or their licence, irrespective of their state of mind [Schedule 1, item 26, new subsections 34(2) and (3)] .

Dealing and storage only at licensed premises

2.33 A licensed dealer will only be permitted to deal in and store tobacco seeds, plant or leaf at premises specified in their licence. Permission may be given, on application, to store tobacco seeds, plant or leaf at premises other than premises specified in their licence. These requirements are the same as, and substitute, those in sections 29 and 30 of the Excise Act.

2.34 If a dealer, without permission, intentionally stores tobacco seeds, plant or leaf, either knowing, or reckless as to whether, the material is tobacco seeds, plant or leaf, and either knowing, or reckless as to whether, the premises are specified in their licence they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years or both. [Schedule 1, item 26, new subsection 35(1)]

2.35 A dealer who stores tobacco seeds, plant or leaf at another site without permission will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 35(2) and (3)]

2.36 If a dealer intentionally carries on business as a dealer at another site either knowing, or reckless as to whether, the premises are specified in their licence they will be liable to a maximum pecuniary penalty of 500 penalty units, a maximum term of imprisonment of 2 years or both. [Schedule 1, item 26, new subsection 35(1)]

2.37 A dealer who carries on business as a dealer at another site will be liable to a maximum pecuniary penalty of 100 penalty units irrespective of their state of mind. Strict liability applies for this offence. [Schedule 1, item 26, new subsections 35(2) and (3)]

Record-keeping

2.38 A dealer will be required to keep accounts and lodge returns in accordance with the Excise Regulations [Schedule 1, item 26, new subsection 37(1)] . This requirement is the same as, and substitutes, that in section 33 of the Excise Act. Division 1 of Part II of the Excise Regulations specifies the records a producer must keep.

2.39 Failure to comply with the requirement to keep records and lodge returns as prescribed is an offence which carries a maximum penalty of 30 penalty units. [Schedule 1, item 26, new section 37]

Access to licensed premises

2.40 Officers are to have access to licensed premises of a licensed dealer in order to monitor compliance with the Excise Act, including licence conditions and permissions. [Schedule 1, item 41, new subsection 86(3)]

Applying for a licence

2.41 Applications for licences are to be forwarded to the Australian Taxation Office (ATO). An application for a licence may be required to be made in a form approved by the Commissioner of Taxation, under delegation from the Chief Executive Officer (CEO) of Customs, and must set out the following information:

•

the applicant's name and address;

•

the name and address of certain other persons who, if they fail to satisfy fit and proper criteria, may constitute grounds for a licence to be refused;

•

a description of the premises in relation to which the licence is sought;

•

particulars of the matters that are listed as relevant to the exercise of the discretion to grant or refuse a licence; and

•

any other information that may be prescribed.

[Schedule 1, item 27, new section 39]

Any fee prescribed in the regulations must accompany an application for a manufacturer's licence [Schedule 1, item 27, new paragraph 39(2)(f)] .

Discretion to grant or refuse a licence

2.42 The decision to grant, or refuse to grant, a licence is discretionary. Matters that may affect the exercise of the discretion to refuse to grant a licence include:

•

the applicant is not a fit and proper person;

•

an employee of the applicant, who performs managerial function, is not a fit and proper person;

•

if the applicant is a company - a director, officer or a shareholder who participates in the management or control of the company, is not a fit and proper person;

•

an associate (as defined for income tax purposes) of the applicant is not a fit and proper person;

•

the ability of the applicant to keep the requisite accounts and records; and

•

any necessity for revenue protection reasons, to refuse to grant the licence.

If a producer licence or dealer licence has been applied for, the licence can be refused only if it is considered necessary that the licence be refused in order to protect the revenue. [Schedule 1, item 27, new section 39A]

2.43 For a manufacturer licence, additional matters affecting the exercise of the discretion include:

•

the adequacy of the physical security of the premises having regard to the nature of the premises, the kind and quantity of goods to be kept there, and the security measures to be employed [Schedule 1, item 27, new paragraph 39A(2)(g)] ; and

•

the suitability of plant and equipment to be used having regard to the nature of the premises and the goods relating to the licence sought [Schedule 1, item 27, new paragraph 39A(2)(i)] .

2.44 For a producer licence or dealer licence, an additional matter affecting the exercise of the discretion is the physical security of the premises having regard to the nature of the premises, the quantity of tobacco leaf to be kept there, and the security measures to be employed. [Schedule 1, item 27, new paragraph 39A(2)(h)]

2.45 For a storage licence, additional matters affecting the exercise of the discretion include:

•

the adequacy of the physical security of the premises having regard to the nature of the premises, the kind and quantity of goods to be kept there, and the security measures to be employed [Schedule 1, item 27, new paragraph 39A(2)(g)] ; and

•

whether a grant of the licence is likely to delay the time at which liability for duty arises [Schedule 1, item 27, new paragraph 39A(2)(k)] .

What a fit and proper person is

2.46 In forming an opinion about whether an individual is a fit and proper person, the following matters may be taken into account:

•

whether the person has been charged, during the preceding year, with an offence against a provision of the 'Excise Acts', or another law where the offence is punishable by imprisonment for one year or longer, or a fine of 50 penalty units or more;

•

whether the person has been convicted of such an offence during the 10 years preceding the application;

•

whether the person has held a licence under the Excise Act which has been cancelled, or has participated in the management or control of a company that has had such a licence cancelled;

•

whether the person is an undischarged bankrupt; and

•

whether a false or misleading statement had been made in the application.

[Schedule 1, item 27, new section 39B]

What a fit and proper company is

2.47 Similar considerations apply in forming an opinion about whether a company is fit and proper . The following matters may be taken into account:

•

whether the company has been charged, during the preceding year, with an offence against a provision of the 'Excise Acts', or another law where the offence is punishable by a fine of 50 penalty units or more;

•

whether the company has been convicted of such an offence during the 10 years preceding the application;

•

whether the company has held a licence under the Excise Act which has been cancelled; and

•

whether a receiver has been appointed or whether the company is under administration, a deed of arrangement is current, it has been placed under official management or is being wound up.

[Schedule 1, item 27, new section 39C]

Licence conditions

2.48 There will be a general condition of a licence that obliges the licence holder to notify the ATO, within 30 days, of any material changes since the application was made which relate to the matters that are relevant to the exercise of the discretion to grant the licence. Licence holders will also be obliged to notify their ceasing to conduct the activity for which the licence has been granted. [Schedule 1, item 27, new subsection 39D(1)]

2.49 Other licence conditions may be prescribed in the law, or by the licence itself if they are considered necessary or desirable for revenue protection reasons, or for the purpose of ensuring compliance with the 'Excise Acts'. [Schedule 1, item 27, new subsections 39D(2) and (3)]

2.50 The conditions may be varied on application by the licence holder. [Schedule 1, item 27, new subsection 39D(4)]

2.51 The conditions that apply to a manufacturer licence may be varied on renewal. [Schedule 1, item 27, new subsection 39F(2)]

Suspension and cancellation of licences

2.52 In broad terms, a licence may either be suspended or cancelled if an opinion is formed, on reasonable grounds, that certain circumstances exist. A licence may be suspended in circumstances where the holder ought reasonably be provided with the opportunity to provide reasons why their licence should not be cancelled. A licence may be cancelled without being suspended.

Circumstances in which a licence may be suspended

2.53 A licence may be suspended if the officer making the decision has reasonable grounds to believe that:

•

a conclusion should be formed on a matter relevant to the exercise of the discretion to grant the licence that is different from the conclusion formed at the time the licence was granted;

•

a condition of the licence has been breached;

•

the licence holder has made a statement to the ATO that is false or misleading;

•

it is otherwise necessary for revenue protection reasons; or

•

in the case of a manufacturer licence or storage licence - for the purpose of ensuring compliance with the 'Excise Acts'.

If the licence held is a producer licence or dealer licence, it can be suspended only if it is considered necessary that the licence be suspended in order to protect the revenue.

[Schedule 1, item 27, new section 39G]

2.54 A conclusion formed on a matter relevant to the exercise of the discretion to grant the licence that is different from the conclusion formed at the time the licence was granted may relate to whether a person or company is no longer fit and proper . In forming a view about whether a person or company is no longer fit and proper the considerations that applied at the time the licence was granted will apply to the period since the licence was granted [Schedule 1, item 27, new sections 39H and 39I] . For instance, if a person has been convicted of an offence against a provision of the Excise Act, or if a company has had a receiver or administrator appointed, after the licence was granted, they may no longer be considered fit and proper .

How a licence is suspended

2.55 The licence holder must be notified in writing if a decision has been made to suspend their licence [Schedule 1, item 27, new subsection 39J(1)] . Notice may be served personally or by post [Schedule 1, item 27, new subsection 39J(2)] .

2.56 The notice must inform the licence holder that they must, within 7 days of notice being served, provide the ATO with reasons why their licence should not be cancelled. [Schedule 1, item 27, new paragraph 39J(3)(a)]

2.57 If it is considered necessary for a licence to be suspended for revenue protection reasons, or for the purpose of ensuring compliance with the 'Excise Acts', the notice will state that the licence is suspended [Schedule 1, item 27, new paragraph 39J(3)(b)] . In that event, suspension takes effect from the time the suspension notice is served [Schedule 1, item 27, new subsection 39J(4)] .

2.58 Suspension can be revoked at any time, and must be revoked if the licence is not cancelled within 28 days from the time suspension took effect. [Schedule 1, item 27, new subsection 39J(5)]

2.59 If a notice does not state that the licence is suspended, it continues in force without restriction, but is liable to being cancelled if a submission against cancellation is not made.

The consequences of licence suspension

2.60 Suspension will prohibit a licence holder from conducting activities that are the subject of the licence. This prohibition is subject to any permissions or directions being given to the licence holder. These permissions or directions may relate to:

•

keeping and storing goods at licensed premises;

•

carrying out processes at licensed premises; or

•

the movement of goods.

[Schedule 1, item 27, new subsection 39K(6)]

2.61 The ATO may also take control of the licensed premises and the goods contained there, if considered necessary for protecting the revenue or ensuring compliance with the 'Excise Acts'. [Schedule 1, item 27, new paragraph 39K(6)(e)]

2.62 The licence holder may be required to pay the costs incurred by the ATO as a result of the suspension [Schedule 1, item 27, new paragraph 39K(6)(f)] . Such a fee may be recovered by court proceedings as a debt due to the Commonwealth [Schedule 1, item 27, new subsection 39K(7)] .

2.63 A tiered penalty will apply to an offence against the suspension prohibition. The following maximum penalties apply if the holder of a suspended manufacturer licence or storage licence contravenes the prohibition and either knows the relevant goods are excisable or is reckless as to whether they are excisable:

•

2 years imprisonment; and/or

•

the greater of 500 penalty units or 5 times the duty that would be payable if the goods had been entered for home consumption.

[Schedule 1, item 27, new subsection 39K(1)]

2.64 The following maximum penalties apply if the holder of a suspended producer licence or dealer licence contravenes the prohibition by, respectively producing or dealing in material:

•

and either knows the relevant material is tobacco seed or plant or is reckless as to whether it is such material:

•

2 years imprisonment; and/or

•

500 penalty units; or

•

and either knows the relevant material is tobacco leaf or is reckless as to whether it is such material:

•

2 years imprisonment; and/or

•

the greater of 500 penalty units or 5 times the duty, calculated according to the method prescribed in the regulations, that would be payable if the tobacco leaf had been manufactured into excisable goods and then entered for home consumption.

[Schedule 1, item 27, new subsection 39K(2)]

2.65 Similarly, if the holder of a suspended producer licence, dealer licence or manufacturer licence contravenes the prohibition by keeping or storing tobacco leaf:

•

and either knows, or is reckless as to whether it is, tobacco leaf:

•

2 years imprisonment; and/or

•

the greater of 500 penalty units or 5 times the duty, calculated according to the method prescribed in the regulations, that would be payable if the tobacco leaf had been manufactured into excisable goods and then entered for home consumption.

[Schedule 1, item 27, new subsection 39K(3)]

2.66 If a licence holder contravenes the suspension prohibition, irrespective of the person's state of mind, or the nature of the material, the maximum penalty is 100 penalty units. Strict liability applies to this offence. [Schedule 1, item 27, new subsections 39K(4) and (5)]

Circumstances in which a licence may be cancelled

2.67 A licence may be cancelled on the same grounds as those the officer may have regard to in suspending a licence. [Schedule 1, item 27, new subsection 39L(1)]

2.68 A licence must be cancelled if the holder requests, in writing, that their licence be cancelled, or if the officer making the decision to cancel the licence is satisfied that the licence holder no longer has in their possession, custody or control any excisable goods or tobacco seed, plant or leaf. [Schedule 1, item 27, new subsection 39L(2)]

How a licence is cancelled

2.69 The licence holder must be notified in writing of a decision to cancel their licence. Notice may be served personally or by post. [Schedule 1, item 27, new subsection 39L(3)]

2.70 The owner of goods stored at premises to which the cancellation applies, if they are not the licence holder, must also be notified in writing to either pay any duty payable on the goods or remove the goods in accordance with a permission. The owner in these circumstances must also be warned that the goods will be sold if they fail to comply with the notified requirements within the time specified. Notice may be served personally or by post. [Schedule 1, item 27, new subsections 39L(4) and (5)]

2.71 If the owner of goods fails to comply with the notice within the specified time or such further time allowed, the ATO will be authorised to sell the goods. [Schedule 1, item 27, new subsection 39L(6)]

2.72 If a person whose licence is cancelled is requested to surrender their licence, they will be liable for a penalty of one penalty unit if they fail to do so. [Schedule 1, item 27, new subsections 39L(7) and (8)]

Removal of goods after a licence has been cancelled

2.73 There will be a prohibition on moving excisable goods on which duty has not been paid, and on tobacco seed, plants and leaf, from premises after the licence to which the premises relates has been cancelled. This prohibition will be subject to any permission being granted to authorise movement of the goods or material.

2.74 A tiered penalty will apply to an offence against the prohibition. The maximum penalties apply if the person contravenes the prohibition and:

•

either knows, or is reckless as to whether, the relevant goods are excisable goods on which duty has not been paid:

-

2 years imprisonment; and/or

-

the greater of 500 penalty units or 5 times the duty that would be payable if the goods had been entered for home consumption;

•

either knows the relevant material is tobacco seed or plant or is reckless as to whether it is such material:

-

2 years imprisonment; and/or

-

500 penalty units;

•

either knows the relevant material is tobacco leaf or is reckless as to whether it is such material:

-

2 years imprisonment; and/or

-

the greater of 500 penalty units or 5 times the duty, calculated according to the method prescribed in the Excise Regulations, that would be payable if the tobacco leaf had been manufactured into excisable goods and then entered for home consumption; and

•

irrespective of the person's state of mind - 100 penalty units.

[Schedule 1, item 27, new section 39M]

This provision will replace section 120A which currently prohibits the removal, without authority, of goods on cancellation of a manufacturer licence [Schedule 1, item 56] .

Removal of goods by the ATO on licence cancellation

2.75 Section 162A of the Excise Act provides for removal of excisable goods on which duty has not been paid from the premises of a manufacturer whose licence is cancelled. This section will be replaced by new section 39N in Part IV which contains the provisions relating to licences. References to section 162A will be replaced by references to section 39N. [Schedule 1, items 63 to 65]

2.76 Any excisable goods held on premises specified on a licence which has expired without renewal, or been cancelled, may be removed to another place the ATO selects. [Schedule 1, item 27, new subsection 39N(1)]

2.77 If the owner does not claim the goods within 6 months from the removal date and pays the duty and expenses of removal and storage, the ATO will be authorised to sell or otherwise dispose of the goods. [Schedule 1, item 27, new subsection 39N(2)]

2.78 Duty payable on the goods is to be calculated according to the rate in force at the time of payment. [Schedule 1, item 27, new subsection 39N(3)]

2.79 This amendment will not affect the special provisions in Part VIIA of the Excise Act dealing with the cancellation of a brewery licence. [Schedule 1, item 27, new subsection 39N(4)]

Specific provisions relating to licences

Temporary transfer of licence when licence holder dies

2.80 The legal personal representative of a licence holder who dies will be regarded as the licence holder for a maximum period of 3 months from the date of death. The legal personal representative or another person must apply for a licence if the activity is to be continued at the same premises after that time. [Schedule 1, item 27, new section 39O]

Services of notices

2.81 Section 29 of the Acts Interpretation Act 1901 contains an interpretative rule about service by post of properly addressed, prepaid posted documents. A document addressed to the premises specified in a licence is to be taken to satisfy the properly addressed requirement. [Schedule 1, item 27, new section 39P]

Review of licensing decisions

2.82 Section 162C of the Excise Act provides for the review of certain decisions on application to the Administrative Appeals Tribunal (AAT). These include decisions to grant and to cancel a manufacturer licence and decisions in relation to approved places. These decisions are to be excluded from the list of decisions to be reviewed by this process. [Schedule 1, item 66]

2.83 Decisions to refuse to grant a licence, or to suspend or cancel a licence, will instead be subject to review in accordance with the provisions of the Taxation Administration Act 1953 relating to the review of taxation decisions. [Schedule 1, item 27, new section 39Q]

2.84 This entitles applicants or licence holders who lodge an objection within 60 days of notice of the decision being served on them to seek review of that decision. Further rights of review by the AAT or appeal to a court are provided for if the applicant or licence holder is dissatisfied with the review decision.

Spent Convictions Scheme

2.85 The obligation to notify of a person's convictions for offences does not affect the operation of Part VIIC of the Crimes Act 1914 which includes provisions that relieve persons of the requirement to disclose spent convictions in certain circumstances. [Schedule 1, item 27, new section 39R]

Licence fees

2.86 Section 14 of the Excise Act, which provides for the imposition of fees on licences, will be repealed [Schedule 1, item 22] . Currently, only manufacturers of excisable goods are liable for licence fees. Excise Regulation 246 prescribes a fee of $10. The requirement for a licence fee to be paid on application for a manufacturer licence will be preserved in new paragraph 39(2)(f) .

Application and transitional provisions

2.87 The new licensing scheme is to apply from the date of Royal Assent to this Bill, although persons registered or licensed under the Excise Act at that time will not be required to apply for licences under the new scheme in order to continue the activities they are currently authorised to conduct. They will, however, be subject to the new rules relating to the conditions of licences and to the suspension and cancellation of licences.

2.88 Regulations may be made for matters of a transitional, saving or application nature arising from the amendments to be made by this Bill. Such regulations may require a person who is regarded as the holder of a licence under the new scheme because they were licensed, registered or the proprietor of an approved place at the date of Royal Assent to provide information that is relevant to the granting, suspension or cancellation of a licence under the new scheme [Clause 4] . Such information is to be regarded as provided in relation to an application for a licence under the new scheme [Schedule 2, item 10] .

Persons who are currently registered to produce or deal in tobacco leaf

2.89 Producers and dealers who are registered under the existing provisions of the Excise Act immediately before the new licensing scheme comes into effect will be regarded as holding a producer licence or dealer licence as appropriate [Schedule 2, subitems 4(1) and 5(1)] . Premises in respect of which they are registered will be regarded as premises specified on their licence for the purposes of the Excise Act as amended by this Bill [Schedule 2, subitems 4(2) and 5(2)] .

Premises that are currently declared to be approved places

2.90 A proprietor of an approved place under section 5A of the Excise Act will be regarded as holding a storage licence from the time the new scheme comes into effect, and the place will be regarded as premises specified in such a licence for the purposes of the Excise Act as amended by this Bill. [Schedule 2, item 2]

Manufacturers and applicants for manufacturer licences

2.91 Manufacturers who are licensed under the existing provisions of the Excise Act immediately before the new licensing scheme comes into effect will be regarded as holding a manufacturer licence under the new scheme [Schedule 2, subitem 9(2)] . Premises in respect of which they are licensed will be regarded as premises specified on a manufacturer licence for the purposes of the Excise Act as amended by this Bill [Schedule 2, subitem 9(3)] .

2.92 A person who has applied for a manufacturer licence but whose application had not been determined before the new licensing scheme comes into effect will be regarded as applying for a manufacturer licence under the new scheme. [Schedule 2, subitem 9(1)]

Licence fees and securities

2.93 Regulation 246 which prescribes the amount of a licence fee will continue to apply under the new licensing scheme as if it had been made under new paragraph 39(2)(f) rather than section 14, which is to be repealed. [Schedule 2, item 3]

2.94 Regulation 12 which prescribes the amount of security in relation to a licence to manufacture tobacco will continue to apply under the new licensing scheme as if it had been made under section 16 of the Excise Act rather than section 39, which is to be repealed. [Schedule 2, item 8]

Permissions for the storage of tobacco leaf

2.95 Section 29 of the Excise Act, which will be repealed by this Bill, provides for permissions to be granted for the storage of tobacco leaf. Permissions under that section that are in force before the commencement of this Act will be regarded as permissions granted under new sections 30 and 35 the corresponding replacement provisions proposed by this Bill. [Schedule 2, item 6]

Accounts and returns required by the regulations

2.96 Registered producers and dealers are required, by section 33 of the Excise Act, to keep accounts and furnish returns as required by the Excise Regulations. As section 33 will be repealed by this Bill, the regulations made under section 33 will be taken to have been made under new sections 32 and 37 the corresponding replacement provisions proposed by this Bill. [Schedule 2, item 7]

Consequential amendments

Approved places

2.97 The introduction of storage licences has consequences for existing references in the Excise Act to an 'approved place'. Section 5A, which provides for the declaration of an approved places in relation to goods, will be repealed. [Schedule 1, item 20]

2.98 A new definition of approved place in subsection 4(1) will replace the existing one. It will be defined as 'premises specified in a storage licence'. [Schedule 1, item 1]

2.99 Premises that are specified in a storage licence may also be a 'warehouse' for the purposes of the Customs Act 1901 if a licence has also been granted under that Act for that purpose.

2.100 The concept of a proprietor of an approved place will also be redefined in subsection 4(1) as 'a person or partnership who holds a storage licence that specifies that place in the licence'. [Schedule 1, items 16 and 18]

References to licensed manufacturer

2.101 Currently, only manufacturers of excisable goods are licensed under the Excise Act. References to licensed persons necessarily means persons who are manufacturers. As this Bill provides for other activities to be licensed, existing references to licensed persons will be changed to references to licensed manufacturers [Schedule 1, items 5, 24, 28, 29, 33, 34, 36, 40, 48 and 51] and references to unlicensed persons will be changed to ensure they relate to persons who manufacture excisable goods without a licence [Schedule 1, items 22 and 23] .

Definitions of producer, dealer, manufacturer and proprietor

2.102 Existing definitions of 'producer', 'dealer', 'manufacturer' and 'proprietor' will be repealed as a consequence of the introduction of new definitions based on the holding of licences under the scheme proposed by this Bill. [Schedule 1, items 3, 4, 7 to 11 and 14 to 18]

Different sized licences

2.103 Section 23 of the Excise Act refers to lesser and larger licences. This concept is redundant and the section will be repealed. [Schedule 1, item 25]

Schedules to the Excise Act

2.104 The following Schedules to the Excise Act will be redundant under the new licensing scheme and will be repealed [Schedule 1, item 67]:

•

Schedule II - Request for registration as producer;

•

Schedule III - Certificate of registration of producer;

•

Schedule IV - Request for registration as a dealer;

•

Schedule V - Certificate of registration as a dealer;

•

Schedule VI - Application for licence to manufacture; and

•

Schedule VII - Manufacturer's licence.