The investigation and prosecution of offences relating to the illegal tobacco industry has been rising in recent years. This is in part due to the sophisticated supply networks that are embedded within legitimate systems. Those legitimate systems involve businesses conducting legitimate business whilst trading in illegal tobacco.
Illicit tobacco offences in Australia are governed by a combination of Commonwealth, State, and Territory laws, with key provisions found in the Customs Act 1901 (Cth), Taxation Administration Act 1953 (Cth), and the Excise Act 1901 (Cth).
Significant penalties apply and it is essential to receive expert advice from a specialist criminal defence lawyer if charged with an illegal tobacco offence.
Financial penalties can be crippling and are potentially more onerous than other penalties that restrict one’s liberty (such as good behaviour orders and terms of imprisonment).
Tobacco Plain Packaging Act 2011(Cth) was introduced to improve public health by packaging tobacco products in a way that discouraged people from using tobacco products, encouraging people to give up tobacco, and reducing exposure of people generally to tobacco smoke. The Trade Practices (Consumer Product Safety Standard) (Reduced Fire Risk Cigarettes) Regulations 2008 enforces these public health objectives by regulating the manufacture and packaging of tobacco products in Australia and those that are imported into Australia.
The packaging of illegal tobacco products are often not compliant with Australian law. Those found to be in possession of cigarettes that are not packaged will also not have a tax invoice, bill of landing, or customs declaration in relation to the tobacco product. These facts are relied on by police and prosecutors to prove that it is reasonable to suspect the accused person did not pay an excise duty on the tobacco, did not pay customs duty on the tobacco product, or excise duty or customs duty is not payable because of an exemption.
A common offence in those circumstances is possessing the tobacco products in circumstances where it is reasonable to suspect a duty is payable and has not been paid, pursuant to Schedule 1 Division 308 of the Taxation Administration Act 1953 (Cth). The penalty to be imposed is based on the quantity and type of tobacco and the excise payable. The following example demonstrates the type of penalty that might be imposed for possessing 75 kg of loose tobacco and 100,000 sticks of cigarettes.
Schedule 1, s 308-15(1)-(2) of the Taxation Administration Act 1953 (Cth) provides that the maximum penalty is the amount of excise duty that would have been payable assuming that the tobacco was excisable goods, multiplied by five.
The rate of excise payable on tobacco on 29 May 2024 was $1,893.57 per kilogram of tobacco and $1.27816 per cigarette stick. Accordingly, the amount of excise payable on 75 kg of loose tobacco possessed by the accused is $142,017.75 and for the 100,000 sticks of cigarettes is $127,816.00, totalling $269,833.75. Multiplied by five, the fine payable by an accused would be $1,373,733.09. This amount is on top of the potential to be sentenced to a maximum of 2 years imprisonment.
If you are charged with an offence relating to the illegal tobacco trade, it is essential you obtain expert legal advice. With offices in Canberra, Sydney and Perth Hugo Law Group is well placed to represent clients charged with illegal tobacco involving inter-agency cooperation and a combination of Commonwealth, State, and Territory laws.
