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2008 - 2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (INCOrPORATION OF PROPOSALS) Bill 2009
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Home Affairs
the Honourable Brendan O'Connor MP)
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) Bill 2009
OUTLINE
The purpose of the Customs Tariff Amendment (Incorporation of Proposals)
Bill 2009 (the Bill) is to amend the Customs Tariff Act 1995 (the Customs
Tariff) to incorporate alterations that were contained in Customs Tariff
Proposals tabled in the House of Representatives during 2009.
These Customs Tariff Proposals are:
. Customs Tariff Proposal (No. 1) 2009, to create a new concessional
item 41H in Schedule 4 to the Customs Tariff;
. Customs Tariff Proposal (No. 2) 2009, to amend rates of customs duty
for certain alcohol and tobacco products in Schedule 7 of the Customs
Tariff (Chilean originating goods); and
. Customs Tariff Proposal (No. 4) 2009, to amend rates of customs duty
for certain beer and grape wine products.
FINANCIAL IMPACT STATEMENT
The measures in the Bill have no financial impact.
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) Bill 2009
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides for the Bill, when enacted, to be cited as the Customs
Tariff Amendment (Incorporation of Proposals) Act 2009.
Clause 2 - Commencement
1. Subclause (1) provides that each provision of this Act specified in
column 1 of the table in that subclause commences, or is taken to have
commenced, on the day or at the time specified in column 2 of the table.
This subclause also provides that any other statement in column 2 of the
table has effect according to its terms.
2. Item 1 of the table in this clause provides that sections 1 to 3 and
anything in the Act not covered elsewhere in the table will commence on
the day on which the Act receives the Royal Assent.
3. Item 2 of the table provides that Schedule 1 of the Bill commences on
1 January 2009.
4. Item 3 of the table provides that Schedule 2 of the Bill commences
immediately after the commencement of the Customs Tariff Amendment
(Australia-Chile Free Trade Agreement Implementation) Act 2008. That Act
commenced on 6 March 2009.
5. Item 4 of the table provides that Schedule 3 of the Bill will commence
immediately after the commencement of the Customs Tariff Amendment (2009
Measures No. 1) Act 2009. That Act commenced on 28 August 2009.
Clause 3 - Schedule(s)
6. This clause is the formal enabling provision for the Schedules to the
Bill and provides that each Act specified in a Schedule is amended or
repealed in accordance with the applicable items in the Schedule. In the
Bill, the Customs Tariff Act 1995 is being amended.
7. Clause 3 also provides that any other items of the Schedule have effect
according to their terms. This is a standard enabling clause for
transitional, savings and application items in amending legislation.
CUSTOMS TARIFF AMENDMENT (INCOrPORATION OF PROPOSALS) Bill 2009
Introductory comments
8. The Customs Tariff Proposal mechanism is used for effecting alterations
to the Customs Tariff, particularly when such alterations are required to
have effect in a short time frame that cannot be achieved through a
Customs Tariff Amendment Bill. Customs Tariff Proposals are used most
commonly for introducing new items, for changing rates of duty or for
restructuring items in the schedules to the Customs Tariff.
9. When the Parliament is sitting, Customs Tariff Proposals are tabled in
the House of Representatives, specifying alterations to the Customs
Tariff.
10. When the Parliament is not sitting for a period exceeding 7 days,
section 273EA of the Customs Act 1901 (the Customs Act) provides that the
Minister may publish a notice in the Commonwealth Gazette, specifying
alterations to the Customs Tariff. Section 273EA requires that, when
such a notice is published in the Gazette, a Customs Tariff Proposal must
be tabled in the House of Representatives, within seven sitting days.
11. Following the introduction of a Customs Tariff Proposal in the House of
Representatives, the alterations contained in the Proposal are
incorporated in a Customs Tariff Amendment Bill that is introduced into
and debated by the Parliament.
12. The Customs Tariff Amendment (Incorporation of Proposals) Bill 2009
amends the Customs Tariff to incorporate alterations that were contained
in three Customs Tariff Proposals tabled during 2009, as follows:
. Customs Tariff Proposal (No. 1) 2009, to create a new concessional
item 41H in Schedule 4 to the Customs Tariff;
. Customs Tariff Proposal (No. 2) 2009, to amend rates of customs duty
for certain alcohol and tobacco products in Schedule 7 of the Customs
Tariff (Chilean originating goods); and
. Customs Tariff Proposal (No. 4) 2009, to amend rates of customs duty
for certain beer and grape wine products.
13. When a Customs Tariff Proposal is incorporated in a Customs Tariff
Amendment Bill, the commencement provisions of the Bill reflect those of
the Proposal. As there is a time lag between the tabling of a Proposal
in the House of Representatives and the passage of a Bill incorporating
the Proposal through the Parliament, the commencement provisions of the
Bill are necessarily retrospective.
Schedule 1 - Incorporating Customs Tariff Proposal (No. 1) 2009
Customs Tariff Act 1995
Item 1 Schedule 4 (after item 41G)
14. Item 1 inserts a new concessional item 41H into Part III of Schedule 4
to the Customs Tariff.
15. Schedule 4 to the Customs Tariff specifies a number of circumstances
where imported goods, or classes of goods, are subject to reduced or Free
rates of customs duty.
16. Item 41H provides duty free entry into Australia for goods for use in
the testing, quality control, manufacturing evaluation or engineering
development of motor vehicles designed or engineered, or to be designed
or engineered in Australia, by motor vehicle producers registered under
the Automotive Competitiveness and Investment Scheme (ACIS), as set out
in the ACIS Administration Act 1999, but not necessarily manufactured in
Australia. The item also applies to components for use in such motor
vehicles.
17. The new item should encourage automotive manufacturers to undertake
design and engineering work for the international automotive market, as
well as reducing administrative costs in importing such equipment.
18. Item 41H applies to goods that were imported into Australia and entered
for home consumption on or after 1 January 2009.
19. Item 41H was given effect through the publication of Customs Notice
(No. 1) 2009 in the Commonwealth Gazette GN 2 of 21 January 2009, under
the provisions of section 273EA of the Customs Act. As required by
section 273EA, Customs Tariff Proposal (No. 1) 2009, containing that
alteration, was tabled in the House of Representatives on
11 February 2009.
Schedule 2 - Incorporating Customs Tariff Proposal (No. 2) 2009
Customs Tariff Act 1995
20. The Customs Tariff Amendment (Australia-Chile Free Trade Agreement
Implementation) Act 2008 (the Chile FTA Act) received the Royal Assent on
27 November 2008, as Act No. 128 of 2008 and commenced on 6 March 2009.
This Act gave effect to Australia's tariff commitments under the
Australia-Chile Free Trade Agreement (the Chile FTA).
21. The Chile FTA Act created a new Schedule 7 in the Customs Tariff to
specify preferential and phasing rates of duty, as required, for goods
imported under the Chile FTA (Chilean originating goods).
22. The Chile FTA Act was enacted in 2008 and did not take into account
subsequent alterations to the Customs Tariff as a result of the February
2009 Consumer Price Index amendments, which increased rates of excise
equivalent customs duty applicable to certain spirit-based alcoholic
beverages, also known as "ready-to-drink" beverages or "alcopops".
23. Customs Tariff Proposal (No. 2) 2009 was tabled in the House of
Representatives on 25 February 2009 to give effect to those alterations,
in respect of Chilean originating goods. Schedule 2 of the Bill amends
the Customs Tariff to incorporate those alterations.
Adjustment of rates of duty in line with the February 2009 Consumer Price
Index (CPI) increase
24. Section 19 of the Customs Tariff provides that rates of customs duty,
for certain alcohol and tobacco products, are adjusted automatically,
twice yearly, in line with movements in the CPI. Following the release
of the December quarter 2008 CPI figures, duty rates for these products
increased with effect from 2 February 2009.
25. The Chile FTA Act, as enacted, did not include these increased rates of
duty and Customs Tariff Proposal (No. 2) 2009 applied the increased rates
of duty to alcohol and tobacco products imported under the Chile FTA.
26. The above amendments, contained in Schedule 2 of the Bill, will ensure
that the excise equivalent component of customs duty on alcohol and
tobacco products imported under the Chile FTA is the same as the rates of
duty on those products when imported from other countries.
27. Items 2-8, 10, 12, 14, 16, 18, 20, 22, 24-30, 32-40 and 42-53 of
Schedule 2 of the Bill refer.
28. These amendments are in accordance with the terms of the Chile FTA.
Increased rates of excise equivalent customs duty for "ready-to-drink"
beverages (RTDs or "alcopops")
29. Customs Tariff Proposal (No. 1) 2008 was tabled in the House of
Representatives on 13 May 2008. This Proposal increased the rates of
excise equivalent customs duty applicable to certain "ready-to-drink"
beverages or "alcopops". The increased rates of duty took effect from
27 April 2008.
30. As these increased rates of duty had not then been incorporated in the
Customs Tariff through a Customs Tariff Amendment Bill, they were not
included in the Chile FTA Act. That Act therefore specified lower rates
of duty for RTDs that are Chilean originating goods.
31. The Customs Tariff Amendment (2009 Measures No. 1) Act 2009 was passed
by the Parliament in August of 2009 and received the Royal Assent on 27
August 2009,
as Act No. 74 of 2009. This Act incorporated the higher rates of duty
for RTDs in the Customs Tariff, with effect from 28 April 2008.
32. Customs Tariff Proposal (No. 2) 2009 also contained alterations to the
Customs Tariff to impose the higher rate of customs duty for those items
in Schedule 7 that are applicable to RTDs. These alterations reflect the
amendments that were contained in the Customs Tariff Amendment (2009
Measures No. 1) Act 2009.
33. Schedule 2 of the Bill also amends the Customs Tariff to reflect those
changes to duty rates for RTDs, when imported as Chilean originating
goods. These amendments will ensure that the excise equivalent component
of customs duty on RTDs, when imported under the Chile FTA, is the same
as the rates of duty on those products when imported from other
countries.
34. Items 1, 9, 11, 13, 15, 17, 19, 21, 23, 31 and 41 of Schedule 2 of the
Bill refer.
35. These amendments are in accordance with the terms of the Chile FTA.
Commencement
36. The amendments contained in Schedule 2 of the Bill commence immediately
after the commencement of the Chile FTA Act. That Act commenced on 6
March 2009, the day on which the Chile FTA entered into force.
37. Item 54 of Schedule 2 is an application provision that provides that
the amendments in Schedule 2 to the Bill apply to goods entered for home
consumption on or after 6 March 2009, and to goods imported into
Australia before 6 March 2009, where the time for working out the rate of
import duty on the goods had not occurred before that date. For example,
this application provision will apply to goods that were warehoused on
importation before 6 March 2009 and not entered into home consumption
until on or after that date.
Schedule 3 - Incorporating Customs Tariff Proposal (No. 4) 2009
Customs Tariff Act 1995
38. As part of the 2009-10 Budget, the Government announced that it would
alter the taxation definitions of beer and grape wine product to ensure
that these goods that mimic spirit based products are taxed as a spirit
product. These alterations are contained in Schedules 2 and 3,
respectively, to the Customs Tariff Amendment (2009 Measures No. 1) Act
2009.
39. As noted above, this Act received the Royal Assent on 27 August 2009,
with commencement on 28 August 2009. The Act created eight new
subheadings in Schedule 3 to the Customs Tariff that were required to
preserve the ad valorem component of the customs duty for goods that fall
outside the revised definitions of beer and grape wine product.
40. Section 19 of the Customs Tariff provides that rates of customs duty,
for certain alcohol and tobacco products, are adjusted automatically,
twice yearly, in line with movements in the CPI. Following the release
of the June 2009 quarter CPI figures, duty rates for these products again
increased with effect from 1 August 2009.
41. The Customs Tariff Amendment (2009 Measures No. 1) Act 2009 was
introduced into Parliament during the first half of 2009 and therefore
did not take into account the increases in rates of excise equivalent
customs duty that took effect on 1 August 2009.
42. Customs Notice (No. 2) 2009 was published in a special Commonwealth
Gazette, S140 of 27 August 2009, under the provisions of section 273EA of
the Customs Act to increase rates of duty for the newly created
subheadings.
43. As well as altering rates of duty in Schedule 3 to the Customs Tariff,
the Notice made equivalent changes for the corresponding items in
Schedule 5 (US originating goods), Schedule 6 (Thai originating goods)
and Schedule 7 (Chilean originating goods).
44. In accordance with the provisions of section 273EA, Customs Tariff
Proposal (No. 4) 2009 was tabled in the House of Representatives, on 16
September 2009.
45. The publication of Customs Notice (No. 2) 2009 and the tabling of
Proposal (No. 4) 2009 ensured that rates of customs duty for certain beer
and grape wine products, on commencement of the Customs Tariff Amendment
(2009 Measures No. 1) Act 2009, were the same as the rates for other
alcoholic beverages.
46. In Schedule 3 of the Bill, items 1 to 8 refer to duty rates in Schedule
3 of the Customs Tariff, items 9 to 16 refer to duty rates in Schedule 5
of the Customs Tariff, items 17 to 24 refer to duty rates in Schedule 6
of the Customs Tariff and items 25 to 32 refer to duty rates in Schedule
7 of the Customs Tariff.
47. The amendments contained in Schedule 3 of the Bill commence immediately
after the commencement of the Customs Tariff Amendment (2009 Measures No.
1) Act 2009. That Act commenced on 28 August 2009.
48. Item 33 of Schedule 3 is an application provision that provides that
the amendments in Schedule 3 to the Bill apply to goods entered for home
consumption on or after 28 August 2009, and to goods imported into
Australia before 28 August 2009, where the time for working out the rate
of import duty on the goods had not occurred before that date. For
example, this application provision will apply to goods that were
warehoused on importation before 28 August 2009 and not entered into home
consumption until on or after that date.