Explanatory Memorandum
(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison)Schedule 5 - accredited clients
Customs Act 1901
The Accredited Client Program
89. The amendments in this Schedule relate to Subdivision C of Division 4 of Part IV of the Customs Act, which was inserted by the Customs Legislation Amendment (International Trade Modernisation) Act 2001 and which commenced on 19 July 2005.
90. Subdivision C sets out the legislative framework for the Accredited Client Program (ACP) relating to the importation of goods. Under the ACP, a person who has met certain audit requirements may enter into an import information contract with Customs. Such a person ("an accredited client") is then able to enter goods that are covered by the contract for home consumption by making a request for cargo release (RCR) in respect of the goods.
91. An accredited client will only need to provide minimum information about the goods in the RCR. The accredited client is then required to provide, for a particular month, one or more periodic declarations containing more detailed but less time-sensitive information on all of the goods entered for home consumption on RCRs during that month.
92. The ability of accredited clients to provide a single aggregate report on all goods imported in a month, as opposed to a report for every consignment of goods imported in that month, may significantly reduce the transaction costs for the accredited client associated with the importation of the goods.
93. Similar to the import processing charge imposed on the making of a normal import entry, an RCR processing charge and periodic declaration processing charge are imposed on the making of an RCR and periodic declaration respectively.
The proposed amendments
94. The purpose of the proposed amendments to Subdivision C is to implement a scheme for the payment of duty and processing charges in relation to the ACP.
95. Under this scheme, an accredited client is required to pay, on the 15th day of a particular month (Month 1), an accredited client monthly duty estimate that is approximately equal to the total duty payable on the goods that have been and are expected to be imported and cleared for home consumption on RCRs for Month 1.
96. On the 15th day of the following month (Month 2), based on the full details reported in the periodic declaration(s) covering all goods entered for home consumption on RCRs during Month 1, the accredited client will pay:
- 96.1.
- the actual import duty payable on the goods that have been imported and cleared for home consumption on RCRs in Month 1 (reduced by the duty estimate paid in Month 1); and
- 96.2.
- the RCR and periodic declaration processing charges with respect to those goods.
97. Special provisions apply where the accredited client monthly duty estimate paid is greater than the actual import duty payable. This duty payment scheme ensures that the duty collection component of the ACP does not affect the Budget.
98. On the 15th day of Month 2, accredited client monthly duty estimate for goods entered, or intended to be entered, for home consumption on RCRs during Month 2 will also be payable. The actual duty (reduced by the duty estimate already paid) and RCR and periodic declaration processing charges in respect of goods entered for home consumption on RCRs for Month 2 will be payable on the 15th day of Month 3.
99. A diagram illustrating the ACP with the duty payment scheme is attached as Attachment A to this Memorandum.
100. The amendments are explained in further detail below.
Items 1 and 2 Subsection 4(1) definitions
101. Subsection 4(1) of the Customs Act sets out the definitions of certain words or phrases that are used in the Customs Act. Item 1 inserts a new definition of "accredited client" into subsection 4(1) to mean a person who has entered into an import information contract.
102. Item 2 inserts a new definition of "accredited client payment day" to mean, for a particular month, the 15th day of that month. All payments relating to the ACP will be payable on the accredited client payment day. These include payments of duty (see new section 71DGB), accredited client monthly duty estimate (see new section 71DGA), RCR processing charge (see section 71DC as amended) and periodic declaration processing charge (see section 71DG as amended).
Item 3 Paragraph 71DB(3)(a)
103. Section 71DB of the Customs Act currently relates to the making of an RCR by "a person who has entered into an import information contract". Such a person is an "accredited client" under the new definition inserted in Item 1 of this Schedule. An RCR can also be made on behalf of an accredited client by a broker nominated for such a purpose in the relevant import information contract.
104. Item 3 inserts in paragraph 71DB(3)(a) the words "an accredited client" in parentheses after the reference to "a person who has entered into an import information contract" in that paragraph. This reproduces, at the beginning of Subdivision C, the new definition of "an accredited client" in subsection 4(1), which makes it easier to follow the rest of Subdivision C as amended by the following items.
Item 4 Subsection 71DC(1)
105. Section 71DC of the Customs Act relates to the liability to pay RCR processing charge in respect of an RCR sent to Customs. Item 4 amends subsection 71DC(1) to substitute "an accredited client" for the description "a person who has entered into an import information contract" and to make other technical changes as a result of that substitution.
106. Under amended subsection 71DC(1), an accredited client becomes liable to pay RCR processing charge when an RCR is sent to Customs by or on behalf of that accredited client.
Item 5 Subsection 71DC(2)
107. Under current subsection 71DC(2), the RCR processing charge in respect of an RCR is payable at the time the periodic declaration in respect of the particular goods to which the RCR relates is taken to have been sent to Customs.
108. Item 5 amends subsection 71DC(2) such that the charge is payable on the accredited client payment day for the month following the month during which the goods are taken, under section 71DB, to have been entered for home consumption.
109. Section 71DB sets outs when goods, in respect of which an RCR is made, are taken to have been entered for home consumption. Under subsection 71DB(7), if an RCR is sent, or taken to be sent, in respect of goods after the goods have been imported or brought to the first port or airport in Australia at which any goods are to be discharged, the goods are taken to have been entered for home consumption at the time the RCR is sent or taken to be sent (as the case may be).
110. Under subsection 71DB(8), if the RCR is sent, or taken to be sent, before the goods are brought to the first port or airport in Australia at which any goods are to be discharged, the goods are taken to have been entered for home consumption when they are brought to that port or airport.
111. The import duty (see new section 71DGB) and periodic declaration processing charge(s) (see section 71DG as amended) in respect of the goods are payable on the same day as the RCR processing charge(s).
Item 6 Subsection 71DD(1)
112. Section 71DD relates to the making of import information contracts. Subsection 71DD(1) currently provides that the CEO of Customs may enter into an import information contract for the purpose of enabling RCRs to be made by, or on behalf of, that person.
113. Item 6 amends subsection 71DD(1) to insert an additional purpose in relation to the making of import information contract. Amended subsection 71DD(1) provides that the CEO may enter into an import information contract for the additional purpose of enabling the payment of amounts of import duty, accredited client monthly duty estimate, RCR processing charge and periodic declaration processing charge to be made on accredited client payment days.
114. This amendment makes it clear that the proposed payment scheme is an integral part of the ACP.
Item 7 At the end of subsection 71DD(4)
115. Subsection 71DD(4) sets out certain matters that the provisions of an import information contract are to include. Item 7 amends subsection 71DD(4) such that the provisions of an import information contract are to also include how amounts of accredited client monthly duty estimate payable under new section 71DGA are to be determined.
Item 8 After subsection 71DD(4)
116. Item 8 inserts new subsection (4A) into section 71DD. Under new subsection (4A), an import information contract must provide a method of working out the amounts of accredited client monthly duty estimate payable that results in the estimate payable by an accredited client for a particular month being approximately equal to the total amount of import duty that the accredited client will be liable to pay in respect of goods covered by the import information contract and taken, under section 71DB, to have been entered for home consumption during the month.
117. For example, for accredited clients who are high volume importers of retail goods, it is anticipated that the amounts of accredited client monthly duty estimate for these clients would be worked out on the basis of the trend in their importation of the relevant goods in recent years, subject to adjustments arising from significant one-off events.
Item 9 Section 71DF
118. Section 71DF relates to the sending of periodic declarations by accredited clients who make RCRs in respect of goods.
119. Item 9 repeals and substitutes section 71DF. Under new subsection 71DF(1), if an RCR in respect of goods is sent by or on behalf of an accredited client, and the goods are taken to have been entered into home consumption under section 71DB, the accredited client must send electronically to Customs one or more periodic declarations containing such information on the goods as is set out in an approved statement. The periodic declaration(s) may also be sent on behalf of the accredited client by a broker nominated for such a purpose in the relevant import information contract.
120. New subsection 71DF(2) requires that a periodic declaration in respect of goods required to be sent under subsection (1) be sent to Customs on or before:
- 120.1.
- the first day of the month following the month during which the goods are taken to have been entered for home consumption under section 71DB (the following month); or
- 120.2.
- such other day of the following month as is prescribed.
121. It is intended to make regulations prescribing the 7th day of the following month for the purposes of new subsection 71DF(2) and for such regulations to commence at the same time as this item.
Item 10 Subsection 71DG(1)
122. Section 71DG of the Customs Act relates to the liability to pay a periodic declaration processing charge in respect of a periodic declaration sent to Customs. Item 10 amends subsection 71DG(1) to substitute "an accredited client" for the description "a person who has entered into an import information contract" and to make other technical changes as a result of that substitution.
123. Under amended subsection 71DG(1), an accredited client becomes liable to pay periodic declaration processing charge when a periodic declaration is sent to Customs by or on behalf of that accredited client.
Item 11 Subsection 71DG(2)
124. Section 71DG(2) currently provides that periodic declaration processing charge for a periodic declaration in respect of particular goods is payable at the time the periodic declaration is taken to have been sent to Customs.
125. Item 11 amends section 71DG(2) such that the charge is payable on the accredited client payment day for the month following the month during which the goods are taken, under section 71DB, to have been entered for home consumption.
126. The import duty (see new section 71DGB)) and RCR processing charge(s) (see section 71DC as amended) in relation to the goods are payable on the same day as the periodic declaration processing charge(s).
Item 12 At the end of Subdivision C of Division 4 of Part IV
127. Item 12 inserts new sections 71DGA and 71DGB into the Customs Act.
New section 71DGA
128. New section 71DGA relates to the liability of an accredited to pay the accredited client monthly duty estimate in respect of goods.
129. New subsection 71DGA(1) imposes a liability on an accredited client to pay accredited client monthly duty estimate for a month in respect of goods that are taken, or expected to be taken, to have been entered for home consumption on an RCR during that month. Such goods must be covered by the import information contract entered into by the accredited client.
130. New subsection 71DGA(2) provides that the accredited client monthly duty estimate for a month is payable on the accredited client payment day for that month (that is, the 15th day of that month).
131. Under new subsection 71DGA(3), the amount of accredited client monthly duty estimate payable by an accredited client for a particular month in respect of goods is to be worked out in accordance with the import information contract entered into by the accredited client that covers those goods. Under amended subsection 71DD(4), the provisions of the import information contract must include how amounts of accredited client monthly duty estimate payable are to be determined.
132. Further, new subsection 71DD(4A) ensures that, as much as possible, the estimate, worked out for a particular month in accordance with the provisions of the relevant import information contract, would approximately equal the total amount of import duty the accredited client is liable to pay on goods that are entered for home consumption on an RCR during that month.
New 71DGB
133. New section 71DGB relates to the payment of import duty on goods:
- 133.1.
- that are covered by an import information contract that is entered into by an accredited client; and
- 133.2.
- that have been imported and entered for home consumption by or on behalf of that accredited client on an RCR.
134. Under new subsection 71DGB(1), the import duty on such goods is payable on the accredited client payment day for the month following the month during which the goods were taken, under section 71DB, to have been entered for home consumption (where an entry for home consumption is made in respect of goods by sending an RCR, section 71DB sets out the time these goods are taken to have been entered for home consumption).
135. Subsection 71DGB(2) then provides for the reconciliation of the accredited client monthly duty estimate paid and the import duty payable in respect of such goods. Under this subsection, the import duty payable on the goods is reduced by the amount of accredited client monthly duty estimate already paid by the accredited client.
136. Subsection 71DGB(3) deals with the situation where the accredited client monthly duty estimate paid is greater than the import duty payable on the goods. In this case, the excess amount is to be dealt with by Customs as agreed in writing with the accredited client. For example, Customs and the accredited client may agree that the excess amount be used to pay the RCR and periodic declaration processing charges on the goods.
Item 13 Subsection 132AA(4) (before table item 2)
137. Section 132AA sets out when import duty on imported goods must be paid. Subsection 132AA(1), which sets out the general rule, has effect subject to the provisions listed in column 2 of the table in subsection 132AA(4).
138. New subsection 71DGB(1), which relates to the payment of import duty on goods entered for home consumption on an RCR, does not follow the general rule in subsection 132AA(1).
139. Item 13 inserts subsection 71DGB(1), as a new item 1A, into column 2 of the table in subsection 132AA(4). This ensures that subsection 71DGB(1) operates as an exception to the general rule in subsection 132AA(1) in respect of the payment of import duty on goods entered for home consumption on an RCR.