Excise guidelines for duty free shops

In general terms, inwards duty free shops will not pay duty. However, excise duty will be payable when excisable goods 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 inwards duty free shop.

7.3 POLICY AND PRACTICE

7.3.1 INWARDS DUTY FREE SHOPS

An inwards duty free shop is authorised to sell airport shop goods which can be excisable or customable goods. The ATO provides authorisation for excisable goods while Customs is responsible for authorisations dealing with imported goods.

Inwards duty free shops sell to relevant travellers who have just completed an international flight from a place outside Australia and are purchasing excisable product prior to clearing the Customs barrier.

Purchases of excisable goods by inward travellers form part of the (Customs) passenger concession. Provided the excisable goods are within the passenger concession limits they remain free of duty. [152]

Specific controls on inwards duty free shops exist so that sales can only be made to relevant travellers.

Identifying a 'relevant traveller'

You must not sell goods to a person in your shop unless the person: [153]

is a relevant traveller [154] , and
shows a ticket or other document that confirms that they have arrived in Australia on an international flight.

Mandatory signage

You must prominently display signs that clearly state: [155]

the amounts of alcohol and tobacco products that may be entered for home consumption, by a relevant traveller, free of excise duty, and
the conditions (if any) under which, for the purposes of the Excise Acts, a traveller needs to comply in relation to their purchase.

These signs must be authorised in writing, by us, at the time the licence is issued.

Mail order and telephone sales

You may arrange sales by mail order or phone. You can do so as long as: [156]

the person is, or intends to be, a relevant traveller
they give details of their intended arrival in Australia (including the flight number or other destination of the international flight)
you inform the traveller of
- the amounts of alcohol and tobacco that may be entered free of excise duty, and
- the conditions (if any) under which, for the purposes of the Customs Acts, a traveller is to comply in relation to the purchase of the goods, 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 confirming the details provided at the time the agreement was entered into. [157]

Record keeping and reporting

What records need to be kept?

You must keep records as specified and may be required to notify us of all sales made to which your permission applies. [158]

These records may include:

sales of excisable product
stock records for excisable products
underbond delivery notes for goods received
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 prepare any special reports.

7.4 PROCEDURES

7.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on making duty free sales contact us.

7.5 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 [159]

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. [160]

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 [161]

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. [162]

False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. [163]

7.6 TERMS USED

Airport shop goods

Excisable airport shop goods are:

alcoholic beverages, and
tobacco products. [164]

Deliver into the Australian domestic market

[165] '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. [166]

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 [167] ; or
a flight, whether direct or indirect, by an aircraft between a place outside Australia from which the aircraft took off and a place in Australia at which the aircraft landed. [168]

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914. The current value of a penalty unit is on www.ato.gov.au at Penalties

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, [169] 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. [170]

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.

7.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

7.7.1 Excise Act 1901

Section 50 - Record keeping

Section 58 - Entry for home consumption 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 61E - Inwards duty free shops

Section 120 - Offences

7.7.2 Excise Regulation 2015

Regulation 52 - Arrangements and proof of travel

Table 1.4 of Schedule 1 - Prescribed circumstances (regulation 50A)

7.7.4 Customs Act 1901

Section 4 - Definitions

7.7.5 Customs Regulation 2015

Regulation 6 - Airport shop goods

7.7.6 Crimes Act 1914

4AA - Penalty units

Excise guidelines for duty free shops

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

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