Senate

Replacement Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison)

Outline and financial impact statement

Outline

The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act), the Passenger Movement Charge Collection Act 1978, the A New Tax System (Goods and Services Tax) Act 1999, the A New Tax System (Wine Equalisation Tax) Act 1999 and the Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001 (the Trade Modernisation Act) to:

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amend Customs offences to ensure consistency with the Criminal Code and ensure consistency in the presentation of financial penalties in the Customs Act (Schedule 1);

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amend the valuation provisions in the Customs Act to ensure that the legislation is consistent with the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (Schedule 2);

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make minor amendments to the Trade Modernisation Act and to the provisions that will be introduced by that Act (Schedule 3);

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allow the seizure without warrant of special forfeited goods in the Protected Zone in certain circumstances (Schedule 4); and

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create a system under which re-mail reporters may be registered and may provide less information in respect of re-mail items in their cargo reports (Schedule 5);

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clarify existing circumstances in which passenger movement charge is not payable and include a new group of people who do not have to pay that charge (Schedule 6).

Financial impact statement

In relation to the amendment of the valuation provisions, a number of motor vehicle importers are seeking to deduct warranty costs from the customs value of their imports. To date, the revenue losses resulting from the deduction of warranty costs from the customs value of imported motor vehicles are estimated to be of the order of around $15 million. Failure to introduce the proposed amendments is likely to result in further revenue losses of $300,000 per month for motor vehicles.

In relation to the passenger movement charge amendments, the proposed amendments are the result of a recommendation from an Australian National Audit Office follow-up audit of the Passenger Movement Charge. The particular recommendation is for Customs to provide a clear understanding of the exemption categories to its clients.

The approximate value of all exemptions to the Passenger Movement Charge is $18.2 million per annum. Of this amount more than 80% is accounted for by children and diplomats. The extension of the Passenger Movement Charge exemption to persons covered by the Overseas Missions (Privileges and Immunities) Act 1995 will result in a very small loss of revenue. This will be more than offset by clarifying the status of passengers who undertake both air and sea legs within their itinerary, which should result in an increase in revenue.

In the absence of accurate information it is difficult to estimate the financial impact of the proposed amendments, however, the nett increased revenue is not anticipated to exceed $100,000 per annum and may be considerably less than that figure.

The other amendments in this Bill have no financial impact.