Importers may bring goods into Australia for a period generally not exceeding twelve months without the payment of duties and taxes, either by lodging a security or undertaking with ABF at the time of import under s162, or by using a carnet under s.162A. This article refers only to temporary imports under s.162.
Section 162 of the Customs Act provides for delivery of goods
· ‘the property of a person in a prescribed class of persons’; or
· goods in ‘a prescribed class of goods’; or
· goods for ‘a prescribed purpose’.
without payment of duty or tax provided a security or undertaking is established. Duty and/or taxes are however payable if the goods are not exported within twelve months, or such extension of time as the DIBP may allow.
To properly understand the current challenge, it is worth quoting Customs Regulation 99 (CR99) as these Regs changed in 2015. CR99 defines what is “prescribed” for the purposes of s.162:
Classes of persons
(2) The classes of persons are tourists and temporary residents.
Classes of goods
(3) The classes of goods are the following:
(a) specialised equipment or tools that:
(i) are to be used in exploration, production, manufacture, repair or modification; and
(ii) are included in a class of goods to which an intergovernmental agreement applies;
(b) goods imported for use at a public exhibition or for entertainment, other than:
(i) cinematograph films of a kind usually used for profit; or
(ii) theatrical costumes, scenery or property;
(c) testing or evaluation equipment.
Prescribed purposes
(4) The purposes for goods are testing and evaluation of goods.
Customs Regulations 2015
It is probable most of us did not realise the full impact of the change to this Regulation in 2015 and the consequences of the insertion of ss.3(a)(ii) above in CR99, given previous guidance such as a March 2015 Fact Sheet and a still current ACN 2001/17 on the requirements for temporary imports.
It should be noted too that the explanatory material issued at the time of this change states: “These restructuring and updating changes are not intended to change the current operation of the equivalent provisions in the Customs Regulations 1926 …. However, where the Regulation makes other changes that require further explanation, these are identified and explained in this Attachment.” Unfortunately, the only comment in relation to the change to the (then) Regulation 124 is that “This section specifies what goods may be brought to Australia on a temporary basis without payment of duty for the purposes of subsection 162A (1) of the Act.”
Please note that the requirement for compliance with an International Convention to which Australia is a signatory at ss.3(a)(ii) above, relates ONLY to prescribed goods and not temporary imports by prescribed persons or for a prescribed purpose. The applicable “intergovernmental agreement” is the Convention on Temporary Admission, otherwise known as the Istanbul Convention, however, note that an International Agreement, although ratified by Australia, does not override Australian legislation.
So, the purpose of this article and the above background?
Industry should take careful note that ABF may audit temporary imports under s.162. Think about this – the goods have arrived, been used and left Australia. The parties and the goods are not in Australia. Duties and taxes were not paid as it was a temporary importation. Drawback is not available except for exhibition goods, as anything else is deemed to be used. So, given past history, who do you think the Department is targeting if the provisions of s.162 and CR99 are not met?
It appears that Australia has only acceded to Annex A of the temporary import convention, which relates to ATA and CPD Carnets, and Annex B1, which is related to Event, Fairs and Exhibitions. The Department has never advised industry that this Convention was not ratified, indeed, quite the contrary. Despite this lack of transparency at least one broker has been audited and duties and taxes called up on machinery and equipment to which no other convention applies. Penalties were threatened.
Compliance is compliance however it is achieved, and for the Regulator to issue no guidance to industry when this matter was discovered, and to then not provide a grace period within which past imports could be reviewed and adjusted as necessary, is unconscionable and in conflict with their stated objectives of working with industry and trade facilitation.
Action Required
May I suggest a review of past temporary import transactions may be timely? May I suggest that if your company may be caught by this matter a Voluntary Disclosure in accordance with s.243T – noting the ABF form is not a requirement of s.243T - should be lodged as step 1? And if a demand is received be very careful of the party to whom it is addressed, as it is probable that only a registered importer or their GST agent in Australia can claim this was a creditable importation and therefore claim an input tax credit if one is available.
Please note other conventions to which Australia has acceded that may assist in your review: -
Temporary Importation of Private Road Vehicles and also Customs Convention Commercial road vehicles
International convention – Samples and Advertising Material
Customs Convention - Scientific Equipment
Convention – Events, Fairs and Meetings
Customs Convention on the Temporary Importation of Professional Equipment
Generally, this last convention may be used under S162 (specialised equipment) with some exceptions including those contained in Annex C – 1, which provides “It does not include equipment which is to be used for internal transport or for the industrial manufacture or packaging of goods or (except in the case of hand tools) for the exploitation of natural resources, for the construction, repair or maintenance of buildings or for earth moving and like projects.”
Further information on International Conventions is available on the DFAT website under “The Australian Treaties Database”.