Excise guidelines for duty free shops

In general terms, outwards duty free shops will not pay duty. However, excise duty will be payable when excisable goods are not taken overseas or are unable to be accounted for e.g. stock shortages.

This chapter focuses on the rules that you need to follow when making duty free sales from an outwards duty free shop.

6.3 POLICY AND PRACTICE

6.3.1 OUTWARDS DUTY FREE SHOPS - OFF-AIRPORT

Off-airport outward duty free shops are usually located away from the airport. However, they could also be physically located at an airport, before the Customs processing point.

You are not permitted to sell or deliver duty free goods unless the purchaser is a ' relevant traveller ' able to show you a ticket or other approved document showing an international flight or voyage . [97]

You must follow specific procedures in the invoicing, packaging and sealing of goods. Sales made from outwards off-airport duty free shops must use the sealed bag method of delivery.

The number or other identification of the traveller's ticket, or similar approved travel documentation, must be recorded on the sales invoice.

You must not deliver the goods to the traveller earlier than 30 days before the traveller is due to depart. [98]

Sales to 'relevant travellers'

Sealing goods

You must enclose goods purchased by a 'relevant traveller' in a package: [99]

sealed so that the goods cannot be removed without the seal being broken
clearly marked to show:
1. that it contains goods that were sold in a duty free shop, and
2. the name of that shop; and
if that package is of a size that will be carried as hand baggage in the cabin of the aircraft or ship the package must be transparent enough for the goods to be easily identifiable.

Invoice preparation

When you deliver goods from your shop for export by a relevant traveller you must prepare, in triplicate, an invoice, being one of a series of sequentially numbered invoices, specifying: [100]

name and usual residential address of the relevant traveller
the following particulars of the intended relevant flight or voyage:
1. date of departure
2. airport or wharf of departure
3. in the case of a relevant flight - flight number or other designation of the flight
4. in the case of a relevant voyage - name of the ship and the number or other destination of the voyage
5. number or other identification of the traveller's ticket or similar approved travel document
a precise description of the goods, including:
1. quantity, in figures, of each item of the goods
2. the total number, in words, of items on the invoice
3. the sale value, in figures, of each item or quantity of items, and
4. the total sales value of those items and quantities of items.

You must prepare the invoices in a way that would make it impracticable to add other items to the description. For hand prepared invoices, a line should be drawn from the last item to the far right of the page and then diagonally to the bottom left hand corner and then across the page to the bottom right hand column.

Distribution of invoices

You must: [101]

place one copy with the goods inside the sealed transparent package and positioned so that the invoice can be read without the package seal being broken
place one copy in a waterproof envelope attached securely to the outside of the package, and
retain one copy for your records.

Procedures to be followed at the airport

Goods carried in the cabin

When a relevant traveller takes packages in the cabin of the aircraft or ship (i.e. taken by hand into the departure lounge on the way to the cabin of the aircraft or ship) you must, [102]

ensure that the package is examined to ascertain whether the seal has been broken or tampered with; and
if the package has not been tampered with, ensure that the attached invoice copy is removed.

Duty Free Security staff, who are employed by duty free shop operators, remove the invoices. This is also called 'plucking' dockets.

Goods checked in as hold baggage

When a relevant traveller does not take packages in the cabin of the aircraft or ship, (i.e. they are checked in as hold baggage) you must, at the point of surrender of the goods: [103]

ensure that the package is examined to check whether the seal has been broken or tampered with, and
if the package has not been tampered with, ensure that the attached copy invoice is removed from the package.

This may be done by airline staff in conjunction with Duty Free Security operatives.

This arrangement does not relate to procedures to be followed for liquid, aerosol and gels (LAG's) goods sold duty free by outwards off-airport duty free stores.

For more information on LAG's, see Section 6.4.1 - Exporting liquid, aerosol and gels duty free goods.

At monthly intervals, Duty Free Security will send to you a list of all dockets retrieved. You must then compare this list with your sales records and pay customs and/or excise duty for those dockets which are not listed as retrieved.

The report generated by you is known as the Missed Dockets Return.

For more details see ' Missed dockets ' later in this section.

Discrepancies at the airport

If a discrepancy is detected such as: [104]

a package is not sealed or has been tampered with
the invoice enclosed in the bag does not correspond with the attached outside invoice
there is no enclosed invoice or attached outside invoice
the package contains goods that are not as specified in the enclosed or attached invoice, or
the package does not contain the goods that are specified on the attached invoice

you must provide us with:

the name of the relevant traveller
particulars of the intended exportation of the goods by the relevant traveller on the relevant flight or voyage such as:
1. date and time of departure
2. relevant flight number and destination of the flight
3. relevant voyage, name of the ship and number or destination of the voyage
the nature of the discrepancy.

You should include shortages detected in this way on your next Missed Dockets Return and pay the appropriate excise duty.

Mail order and telephone sales

You or your staff (including the proprietor and the proprietor's servants and agents) can agree to sell duty free goods through mail order or over the phone as long as: [105]

the person is a relevant traveller
details of their intended travel have been given, and
the agreement is subject to the condition that the sale takes place in the shop (that is the relevant traveller must pick the goods up from the shop).

Prior to the delivery of goods you must sight the ticket for the relevant flight which must match with the details provided at the time the agreement was entered into. [106]

Sales to ships' crew - additional requirements

Sales to ships' crew (relevant travellers) are required to be reported by facsimile to the Tax Office prior to departure of the vessel to enable verification of the exports by Customs.

This requirement is specified as a condition on your permission to sell duty free goods to relevant travellers.

Conditions travellers must be made aware of

You must ensure that relevant travellers are made aware of any conditions of a permission with which the traveller is required to comply. [107]

Travellers must, when they take possession of the goods, sign an approved form acknowledging their obligations concerning the export of the goods. [108]

Obligations of the relevant traveller are they:

shall not remove, alter or otherwise interfere with an invoice attached outside the sealed package [109]
shall not break the seals or otherwise tamper with the integrity of the package [110]
when taking a sealed package into a departure area or checking in a sealed package as baggage shall: [111]
- present the package sealed and with the outside invoice attached, and permit examination of the package and removal of the invoice by the duty free shop proprietor's agent. [112]

Sales to Diplomats, Consuls, Navy etc

In some circumstances, your permission may allow you to make sales to persons or organisations who are not relevant travellers. This includes sales to diplomats, consuls and the Royal Australian Navy.

If you make sales to the Navy, diplomats or consuls you may be entitled to a remission of the excise duty. [113] You should retain relevant documentary orders as proof of this entitlement.

For more information see Chapter 9 : Remissions and exemptions .

Record keeping and reporting

What records need to be kept?

You must keep, and make available to us when requested, records as directed. [114]

These will typically include proof of export of goods that have been delivered to a relevant traveller. This may be the electronic record of invoice numbers removed and provided to you by Duty Free Security. [115]

You may also be required to notify us of all sales made to which your permission applies. [116]

Further records to keep may include:

copy of the sales invoice
photocopy of the travel documents attached to the sales invoice
stock records for excisable products
underbond delivery notes for goods received from suppliers
underbond delivery notes for goods removed
copies of approved single movement permissions (SMP) for movement in and out of your licensed premises
copies of approved remissions
orders for goods delivered as excise free goods in prescribed circumstances such as diplomatic and consular sales
documentation relating to your physical stocktakes.

What reports need to be prepared?

You must provide the following reports to us:

Prior to departure

If we direct you to, you must provide the following sales information [117] prior to the date of departure of the flight or voyage: [118]

name of shop
name of relevant traveller
details in relation to relevant flight or voyage:
1. date and time of departure, and
2. flight number or name of ship and voyage number
full description of any item included in the sale with a sale value of $500 or more
the total number of items of the goods included in the sale
total number of specially sealed packages referred to in paragraph 79(7)(d) of the Excise Regulations in which the goods included in the sale are packed,
the total number of the specially sealed packages:
1. that are able to be carried in the cabin of the aircraft or ship, and
2. that are not able to be carried in the cabin of the aircraft or ship, and
the invoice numbers in respect of all invoices relating to the sale.

Proof of export

This report of the invoice numbers of copy invoices, removed from the package of goods delivered to relevant travellers, can be obtained from Duty Free Security. You should provide this report to us, as an electronic record, within 10 working days after the date of departure of the relevant traveller. [119]

Missed dockets

Within 21 working days after the end of the month you must lodge a return stating: [120]

the name of the duty free shop
the invoice number of each invoice:
1. which has been prepared as set out in 'Invoice preparation' in this section
2. with a date of the proposed departure that is in that month, and
3. for which a copy has not been removed as set out in 'Procedures to be followed at the Airport' in this section
full invoice details as set out in 'Invoice preparation' in this section, and
the amount of excise duty payable in respect of the goods to which the invoice relates.

This is done by completing a Duty-free operator return (NAT 10405) and sending it to us either by:

fax to 1300 726 895, or
mail to:

Duty-free operator returns

PO Box 5423

WOLLONGONG NSW 2520

You must pay to us the sum of the amounts of excise duty payable, at the rate in force when the goods were delivered to the relevant traveller. [121]

Duty-free operator returns and rates of duty can be found on our website at www.ato.gov.au

6.3.2 OUTWARDS DUTY FREE SHOPS - ON-AIRPORT

On-airport outward duty free shops are located after the Customs processing point.

Sale or delivery of duty free goods is only permitted to a 'relevant traveller' [122] who is able to show a ticket or other approved documentation that shows an international flight or voyage. [123]

You must follow specific procedures in the invoicing of goods.

Sales to 'relevant travellers'

Invoice preparation

When you make a sale to a relevant traveller you must prepare, in duplicate, an invoice, being one of a series of sequentially numbered invoices, specifying: [124]

the following particulars of the intended relevant flight or voyage:
1. date of departure
2. flight number or other designation of the relevant flight
a precise description of the goods, including:
1. quantity, in figures, of each item of the goods
2. the sale value, in figures, of each item or quantity of items, and
3. the total sales value of those items and quantities of items.

Aircraft crew (or the pilot) are also eligible to purchase goods from you when they comply with the definition of 'relevant traveller'. In addition to the above, you must also record on the sales invoice [125] :

the name and usual residential address of the relevant traveller, and
the airport of departure.

You must prepare the invoices in a way that would make it impracticable to add other items to the description. [126]

Distribution of invoices

You must: [127]

give one copy to the relevant traveller, and
retain one copy for your records.

Mail order and telephone sales

You or your staff (including the proprietor and the proprietor's servants and agents) can agree to sell duty free goods through mail order or over the phone as long as: [128]

the person is a relevant traveller
details of their intended travel have been given, and
the agreement is subject to the condition that the sale takes place in the shop, that is the traveller picks the goods up in the shop.

Prior to handing the goods to the traveller, you must sight the ticket for the relevant flight which must match with the details provided at the time the agreement was entered into. [129]

Record keeping and reporting

What records need to be kept?

You must keep, and make available to us when requested, records as directed. [130]

You may also be required to notify us of all sales made to which your permission applies. [131]

These records may include:

sales of excisable product
stock records for excisable products
underbond delivery notes for goods received from suppliers
underbond delivery notes for goods removed
copies of approved Single movement permissions (SMP) for movement in and out of your licensed premises
copies of approved remissions, and
documentation relating to your physical stocktakes.

What reports need to be prepared?

You are not required to provide any particular reports however you may be directed to supply specific returns. If this is the case you will receive a specific direction to do so.

6.3.3 WHAT HAPPENS WHEN THE TRAVELLER DOES NOT EXPORT GOODS?

The traveller's responsibilities and duties

If a traveller does not export the goods on the relevant flight or voyage they must, by noon of the next working day after the scheduled departure time:

notify you: [132]
1. if the traveller intends to export the goods on a subsequent flight or voyage, departing not more than 48 hours after the initial scheduled time, they must notify you of that intention along with the flight or voyage numbers and date and intended time of departure, or
2. if the traveller no longer intends to travel they must notify you no later than the close of business on the second working day after the initial scheduled departure time, and return the goods to your shop, and
if having notified you that they intend departing on a flight or voyage after 1) above, and they do not export the goods they must: [133]
1. notify you that the goods have not been exported, not later than noon on the next working day after the specified date of departure, and
2. return the goods to your shop no later than the close of business of the second working day after the specified date of departure.

Your responsibilities and duties

You must:

take returned goods back into stock (to be able to account for the sales invoice), [134] or
advise us of goods that were not exported via the Duty-free operator return that you are obliged to submit monthly, [135] and
pay us the sum of the amounts of excise duty specified in the return. [136]

For more information about how to calculate and pay excise duty see Chapter 8 - Accounting for excisable goods .

6.3.4 PREVENTION OF COLLUSION

You or your staff must not collude with passengers to obtain duty free goods. You must not enter into an arrangement with a traveller where goods delivered to the traveller under the permission are to: [137]

be transferred to you upon return of the relevant traveller to Australia, or
remain with you.

Any such collusion may result in the revocation of your permission and/or a court imposed penalty.

6.4 PROCEDURES

6.4.1 EXPORTING LIQUID, AEROSOL & GELS DUTY FREE GOODS

On 31 March 2007 the Department of Transport and Regional Services introduced restrictions on the volume of liquid, aerosol and gaseous (LAG's) goods that an international passenger can take on board a flight in carry on luggage. This means that any LAG's goods over 100 millilitres must be packed in baggage that is checked in and therefore transported in the hold of the plane. Effectively, this means spirits.

This change in airport security impacts on outwards off-airport duty free stores as the outwards on-airport and inwards duty free stores operate either after the Customs barrier (outwards on-airport), or before it (inwards duty free), in which case the security risk is not an issue.

What is the LAG's change and how does it affect my operations

Any LAG's sold to a relevant traveller by an outwards off-airport duty free store must be sealed in a separate bag to other duty free purchases. You must complete a sales invoice in the same manner as all other sales although if the relevant traveller has other non-LAG duty free purchases (i.e. cigarettes) then a separate docket must be completed for both bags.

The traveller must place the sealed LAG's bag into their luggage that is to be checked into the hold of the plane. They should remove the docket attached to the exterior of the sealed bag and, once inside the airport and past the Customs checkpoint, they must give the docket to the Duty Free Security operatives.

Missed dockets for LAG's should be treated in the same manner as missed dockets for other non-LAG goods.

This is currently an administrative arrangement agreed to by us and Customs to ensure that the security changes that have been implemented do not adversely impact the outwards off-airport duty free operators. Proposals for legislative changes are being developed to support this arrangement.

6.4.2 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on making duty free sales contact us as follows:

phone 1300 137 295
fax (03) 9285 1168 , or
write to us at

Australian Taxation Office

PO Box 3001

PENRITH NSW 2740

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO DUTY FREE SHOPS?

The following are the penalties that may apply after conviction for an offence.

Move, alter or interfere

If you move, alter or interfere with excisable goods that are subject to excise control , without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods [138]

Note:

This includes moving underbond excisable goods from your premises to any other location or for export.

If your movement of underbond excisable goods does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods. [139]

Deliver

If you deliver excisable goods into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods [140]

Records

If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Evade

If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable goods or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units. [141]

False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. [142]

6.6 TERMS USED

Deliver into the Australian domestic market [143]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable goods are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered. [144]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable goods

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act.

Excisable goods include:

tobacco
cigarettes
beer, and
spirits.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

International flight

An international flight is defined as a flight, whether direct or indirect, by an aircraft between a place in Australia from which the aircraft takes off and a place outside Australia at which the aircraft lands or is intended to land. [145]

International voyage

An international voyage is defined as:

a voyage, whether direct or indirect, by a ship between a place in Australia and a place outside Australia. [146]

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $110.

Proprietor

In relation to an outwards duty free shop, is the holder of the warehouse licence that relates to the outwards duty free shop. [147]

Relevant traveller

A person who intends to make an international flight or international voyage, whether as a passenger on, or as a member of the crew (or the pilot or master) of an aircraft or ship, [148] or
a person who has arrived in Australia on an international flight, whether as a passenger on, or as a member of the crew (or the pilot) of, an aircraft and has not been questioned, for the purposes of the Customs Act 1901 , by an officer of Customs, in respect of goods carried on that flight. [149]

Remission

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture, in prescribed circumstances.

For more information about remissions see Chapter 9 - Remissions and exemptions.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

Warehouse licence [150]

Has the same meaning as it has in the Customs Act 1901 which states:

'Warehouse' means a place that a person or partnership is licensed under section 79 to use for warehousing goods. [151]

6.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

6.7.1 Excise Act 1901

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 50 - Record keeping

Section 58 - Entry for home consumption etc.

Section 59 - Payment of duty

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 61D - Outwards duty free shops

Section 120 - Offences

6.7.2 Excise Regulations 1925

Regulation 50 - Circumstances under which refunds, rebates and remissions are made

Regulation 50A - Other circumstances under which refunds, rebates and remissions are made

Regulation 79 - Outwards duty free shops

6.7.4 Customs Act 1901

Section 4 - Definitions

6.7.6 Crimes Act 1914

4AA - Penalty units

Excise guidelines for duty free shops

	Date:	Version:
You are here	1 July 2006	Original document
	1 July 2015	Updated document
	7 January 2022	Updated document
	1 July 2024	Current document

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