ATO Interpretative Decision

ATO ID 2008/105 (Withdrawn)

Excise

Excise: meaning of tobacco
FOI status: may be released
  • This ATO ID is withdrawn and is replaced by ATO ID 2009/118
    This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

What plant species are tobacco plants for the purposes of the Excise Act 1901?

Decision

Species of the Nicotiana genus where the leaves of that species are generally used for smoking, chewing or snuff are considered to be tobacco plants for the purposes of the Excise Act. Those species are currently Nicotiana tabacum and Nicotiana rusticum.

Should varieties of other species of Nicotiana be developed where the leaves are generally used for smoking, chewing or as snuff then those species would also be considered tobacco plants for the purposes of the Excise Act.

Facts

A nursery grows Nicotiana species including Nicotiana sylvestris and Nicotiana excelsior.

Reasons for Decision

Parts IV, IVA and X of the Excise Act refer, in various sections, to tobacco seed, tobacco plant or tobacco leaf. For example Part IV section 28 of the Excise Act provides that it is an offence for a person who does not have a producer licence to produce tobacco seed, tobacco plant or tobacco leaf. Part IVA section 44 of the Excise Act provides that permission may be given for a person to move tobacco seed, tobacco plant or tobacco leaf from one place to another place. Part X section 117C of the Excise Act provides that it is an offence for a person to unlawfully possess tobacco seed, tobacco plant or tobacco leaf.

The Excise Act, however, does not provide a definition of tobacco seed, tobacco plant or tobacco leaf.

The Excise Tariff Act 1921 is incorporated and read as one with the Excise Act by virtue of section 6 and the definition of Excise Acts in subsection 4(1) of the Excise Act. The Schedule to the Excise Tariff Act contains the following definition of tobacco:

tobacco means tobacco leaf subjected to any process other than curing the leaf as stripped from the plant.

Item 5 of the Schedule to the Excise Tariff Act includes 'tobacco, cigars, cigarettes and snuff'.

Section 68 of the Excise Act states:

No person shall be deemed to manufacture merely because he or she cures tobacco leaf as stripped from the plant so as to convert it into leaf tobacco.

The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne defines tobacco as:

1. a solanaceous plant of the genus Nicotiana, of American origin, with narcotic leaves used for smoking, chewing, or snuff. 2. its leaves, especially as prepared for smoking

The dictionary further explains that:

Tobacco was originally used by some North American indigenous peoples as a narcotic drink, but by the time that Christopher Columbus (1451-1506) (see Nicotiana) arrived they were smoking it. They used it for ceremonial purposes and believed it to have medicinal properties, which was the main reason for taking it back to Europe. The diplomat Jean Nicot is said to have introduced it to France in 1556. Tobacco was originally smoked mainly in pipes and cigars; cigarettes did not become socially acceptable until the late 18th century. It is usually made from the leaves of common tobacco (Nicotiana tabacum) and sometimes from wild tobacco (N. rusticum); many varieties have been developed and a number of different additives and preparation techniques are used...

Hence, the ordinary meaning of the word 'tobacco' is a species of the Nicotiana genus of the solanaceae family, the leaves of which are used for smoking, chewing or snuff.

The references to tobacco seed, tobacco plant or tobacco leaf were inserted by the Excise Amendment (Compliance Improvement) Act 2000. In the Explanatory Memorandum to the Excise Amendment (Compliance Improvement) Bill 2000 the purpose of the amendments is described as:

1.2 The amendments will address deficiencies in existing provisions of the Excise Act that regulate the production, dealing, manufacturing and storage of tobacco. The amendments will create a more robust statutory framework to support the compliance initiatives of the Australian Taxation Office (ATO). They are designed to protect the excise revenue base from the illicit trade in tobacco, and from arrangements prone to duty evasion and deferral in relation to excisable goods generally.

Thus the changes made by the Excise Amendment (Compliance Improvement) Act, including the insertion in various sections of the phrase tobacco seed, tobacco plant and tobacco leaf, were directed at ensuring that excise duty collected on excisable tobacco was not eroded. It can be seen references to tobacco seed, tobacco plants and tobacco leaf are references to those seeds, plants and leaves that can be manufactured into tobacco products such as cigarettes, cigars and smoking or chewing tobacco.

Historically the Nicotiana species grown for the leaves of the plant to be used for smoking, chewing or as snuff are Nicotiana tabacum and Nicotiana rusticum.

Therefore tobacco plant for the purposes of the Excise Act are those species of the genus Nicotiana, the leaves of which are used for smoking, chewing or as snuff. Those species are currently Nicotiana tabacum and Nicotiana rusticum.

Should varieties of other species of Nicotiana be developed where the leaves are generally used for smoking, chewing or as snuff then those species would also be considered tobacco plants for the purposes of the Excise Act.

Date of decision:  26 June 2008

Legislative References:
Excise Act 1901
   Part IV
   Part IVA
   Part X
   subsection 4(1)
   section 6
   section 28
   section 44
   section 68
   section 117C

Excise Tariff Act 1921
   section 5
   the Schedule
   Item 5 of the table in the Schedule

Related ATO Interpretative Decisions
ATO ID 2008/104

Other References:
Excise Amendment (Compliance Improvement) Act 2000
Explanatory Memorandum to the Excise Amendment (Compliance Improvement) Bill 2000
The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne

Keywords
Tobacco leaf
Tobacco plant
Tobacco seed

Business Line:  Excise Centre of Expertise

Date of publication:  4 July 2008

ISSN: 1445-2782

history
  Date: Version:
  26 June 2008 Original statement
You are here 30 October 2009 Archived