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2004-2005
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT BILL (NO. 2) 2005
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Minister for Justice and Customs Senator
the Honourable Christopher Martin Ellison)
CUSTOMS TARIFF AMENDMENT BILL (NO. 2) 2005
OUTLINE
The purpose of this Bill is to amend the Customs Tariff Act 1995 (the Tariff) to:
amend Additional Note 3(a) to Chapter 22 to the Tariff to insert an upper limit for
alcohol content, in respect of grape wine;
insert, in tariff subheadings 2206.00.30 and 2206.00.4, references to Additional
Note 4 to Chapter 22 (defining `grape wine product'); and
remove the 3% customs duty that applies to `business inputs' that are subject to a
Tariff Concession Order (TCO).
FINANCIAL IMPACT STATEMENT
The financial impact of the proposed amendment to Additional Note 3(a) to
Chapter 22 is difficult to quantify, but it is expected that it may result in a small
increase in Government revenue.
The financial impact of the measures relating to the insertion of references to Additional
Note 4 into tariff subheadings 2206.00.30 and 2206.00.4 is negligible.
It is estimated that the amendments relating to the removal of the three per cent customs
duty that applies to goods the subject of a TCO will result in duty forgone of
$290 million in 2005-06; $320 million in 2007-08; and $340 million in 2008-09.
Customs Tariff Amendment Bill (No. 2) 2005
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CUSTOMS TARIFF AMENDMENT BILL (NO. 1) 2005
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides for the Act, when enacted, to be cited as the Customs Tariff
Amendment Act (No. 2) 2005.
Clause 2 - Commencement
Subclause (1) provides that each provision of the 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.
Item 1 of the table 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.
Item 2 of the table provides that items 1 to 3 of Schedule 1 of the Bill commence on
1 July 2005. The amendments in items 1 to 3 of Schedule 1 were contained in Customs
Tariff Proposal No. 3 (2005) which will take effect on 1 July 2005.
Item 3 of the table provides that items 4 to 7 of Schedule 1 of the Bill are taken to have
commenced on 11 May 2005. The amendments in items 4 to 6 were contained in
Customs Tariff Proposal No. 2 (2005) which took effect on 11 May 2005.
The Customs Tariff Proposal mechanism is used for effecting alterations to the 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 and for
restructuring items in the Schedules to the Tariff.
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. The amendments
necessarily have the same date of effect as the original Proposal.
Clause 3 - Schedule(s)
This clause is the formal enabling provision for the Schedule to the Bill, providing that
each Act specified in the Schedule is amended in accordance with the applicable items of
that Schedule. The clause also provides that other items of the Schedules have effect
according to their own terms.
Customs Tariff Amendment Bill (No. 2) 2005
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Schedule 1 - Amendments
Customs Tariff Act 1995
Item 1 - Schedule 3 (Chapter 22, paragraph (a) of Additional Note 3)
This item amends Additional Note 3(a) to Chapter 22 in Schedule 3 to the Customs Tariff
Act 1995 (the Tariff) by inserting a 22% upper limit on alcohol content of grape wine
defined by the Note.
This Note was inserted into the Tariff on 1 July 2000. Under the Excise Tariff Act 1921,
wine, as defined in Subdivision 31-A of the A New Tax System (Wine Equalisation Tax)
Act 1999 (the WET Act), is not excisable. Any locally manufactured wine that does not
fall into that definition is excisable. In July 2000, Regulation 31-2.01 was inserted into
the WET Regulations so that wine for the purposes of Subdivision 31-A of the WET Act
must contain less than 22% by volume of ethyl alcohol. Hence, wine with more than
22% by volume of ethyl alcohol that is manufactured in Australia is excisable.
However, due to the Note in the Tariff, imported wine with more than 22% by volume
of ethyl alcohol is not subject to a rate of customs duty that is the same as the excise
rate for locally manufactured wine. This amendment will ensure that imported wine of
fresh grapes, that does not comply with the revised Additional Note, will attract
customs duty at the same rate as excise duty on similar locally manufactured product.
The alteration relating to Additional Note 3 to Chapter 22 was included in Customs
Tariff Proposal No. 3 (2005), with date of effect of 1 July 2005.
Items 2 and 3 - The description of goods in column 2 of subheadings 2206.00.30
and 2206.00.4 of Schedule 3
Items 2 and 3 insert references to Additional Note 4 to Chapter 22 in subheadings
2206.00.30 and 2206.00.4 of Schedule 3 to the Tariff. Additional Note 4 defines `grape
wine product' for the purposes of the Tariff. Grape wine product includes certain wine
based cream beverages, generically described as `Irish Cream'. When imported into
Australia, these goods are subject to excise equivalent rates of customs duty, while
similar goods manufactured in Australia are subject to the Wine Equalisation Tax
(WET).
The reference to Additional Note 4 in the above tariff subheadings will correct this
anomaly and allow Irish Cream to be classified in either subheading. This will mean
that these products will be subject to the WET and applicable rates of customs duty.
The alterations relating to Additional Note 4 to Chapter 22 were included in Customs
Tariff Proposal No. 3 (2005), with date of effect of 1 July 2005.
Customs Tariff Amendment Bill (No. 2) 2005
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Items 4 to 7 - Background
Items 4 to 7 of the Bill amend the Tariff to remove the 3% customs duty on goods that
are business inputs and are subject to a Tariff Concession Order (TCO).
TCOs provide concessional tariff rates for imported goods when there are no
substitutable domestically produced goods. Goods which are known as business inputs
and which are subject to a TCO attract a general rate of customs duty of three per cent.
The Government's removal of the tariff on business inputs provides duty free entry for
all goods imported under a TCO, except those classified to heading 3819.00.00.
This change will reduce business input costs, increase the international competitiveness
of Australian business, and encourage investment in efficient and sustainable industries.
Item 4 - Schedule 4 (item 19, the rates of duty in column 3)
Item 19 in Schedule 4 to the Tariff applies to goods subject to a TCO that are repaired
overseas. Item 7 reduces the rate of customs duty on the cost of materials, labour and
other charges involved in the repair, from 3% to Free.
Item 5 - Schedule 4 (item 50)
Item 4 repeals and substitutes item 50 in Schedule 4 to the Tariff. Item 50 provides
concessional rates of duty for goods that are subject to a TCO and are business inputs.
New item 50(1) reduces the rate of duty for goods subject to a TCO from 3% to Free,
except goods classified in heading 3819.00.00 of Schedule 3 to the Tariff.
New item 50(2) applies to goods of heading 3819.00.00, subject to a TCO and that are
exempt from the Product Stewardship Oil Levy. Paragraph 50(2)(a) reduces the rate of
duty from 3% to Free for these goods. Paragraph 50(2)(b) applies to goods of heading
3819.00.00 covered by a TCO that have not been exempted from the Product
Stewardship Oil Levy. Paragraph 50(2)(b) removes the 3% customs duty but retains the
Waste Oil Levy of $0.05449 per litre.
Item 6 - Schedule 4 (item 50A)
Item 6 repeals item 50A. Item 50A applies to goods subject to a TCO that are defined as
consumption goods in United Nations Statistical Papers. The rate of duty for these goods
is currently Free. As item 5 above is reducing the duty rate for all goods subject to a
TCO, except goods classified to heading 3819.00.00, to Free, consumption goods will
now be covered by item 50. Item 50A is therefore no longer necessary and is being
repealed by item 6.
Customs Tariff Amendment Bill (No. 2) 2005
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Item 7 - Transitional
Item 7 is a transitional item to ensure that any TCO that was in effect before the
amendments to item 50 contained in this Bill continues to have effect after those
amendments come into effect.
Customs Tariff Amendment Bill (No. 2) 2005
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