Federal Budget 2022-23 – overview of customs and trade related measures

On 29 March 2022, the Treasurer handed down the Australian Federal Budget for 2022-23 (Budget).

Below is a summary of the significant Customs & Trade related measures announced.

Additional financial support announced for Australian exporters and traders

The Government has announced that it will provide $267.1 million over four years commencing from 2022-2023, to modernise and improve Australia’s trade system and support Australian exporters, including the following measures:

• $127.4 million to continue and expand the ‘Digital Services to Take Farmers to Market’ initiative to transform the delivery of Government agricultural export systems. This funding will be provided to the Department of Agriculture, Water and the Environment.
• A further $100 million to expand the Export Market Development Grants program delivered via Austrade, providing additional support for small and medium export businesses to re-establish their presence in overseas markets – this adds to the $80 million already announced in December 2021.
• $48 million to modernise Australia’s trade system, reduce the regulatory burden on exporters and to identify opportunities for further reforms. This includes:
  • $26.9 million for the Simplified Trade System (STS) Implementation Taskforce to develop a ‘second pass business’ case for a ‘tell us once’ digital service for import and export interactions to simplify trade interactions with government.
  • $21.1 million for technical foundations for modernising Australia’s core trade systems provided to the Australian Border Force (ABF).
• $11.7 million for the STS Implementation Taskforce to expand the Trade Information Service to provide exporters with a single source of online information to facilitate access to international markets – this service can be accessed here.

These measures are intended to support Australian exporters by improving accessibility to overseas markets and creating a more modern, streamlined and user-friendly experience for operators within Australia’s trade system.

Support for Victoria’s freight network

The Budget has also pledged $3.3 billion for Victoria’s freight network as part of the Melbourne Intermodal Terminal Package, in a funding boost to infrastructure, allowing for more freight movements to be on rails in the future.

This funding includes $1.2 billion for the Beveridge Interstate Freight Terminal, $280 million for road connections, $740 million for the Western Interstate Freight Terminal (WIFT) in Truganina, $920 million for the Outer Metropolitan Ring-South Rail connection to the Western Interstate Freight Terminal, and $109.5 million for the Mickleham Road upgrade.

This funding is anticipated to meet the forecasted increase in freight capacity requirements in Victoria over the coming decades.

A temporary 50% reduction in the excise fuel duty rate to ease cost of living pressure

The Federal Government has announced that it will provide a temporary 50 per cent reduction to the excise and excise-equivalent customs duty rate that applies to petrol and diesel, from the current rate of 44.2 cents per litre which will be reduced to 22.1 cents per litre. This reduction will last for six months commencing on 30 March 2022 and finishing on 29 September 2022.

These changes will be implemented via the Customs Tariff Amendment (Cost of Living Support Bill 2022 (Bill), and it is anticipated that the measures will result in savings on fuel costs that will be passed on to consumers.

In conjunction with the announced reduction, the ABF has published Australian Customs Notice (ACN) No. 2022/17, which provides the details of how the announced reduction will operate.

The ACN addresses issues that may arise with timing of the measures, as the reduced rates will not be entered into the Integrated Cargo System (ICS) until after the Bill receives the Royal Assent. If this occurs after 30 March 2022, the rates will retrospectively commence on 30 March 2022. Any goods imported on or after 30 March 2022 until the time the reduced rates have been entered into the ICS will need to apply for a refund.

The ACN further details how the temporary duty reduction will be applied to the appropriate tariff subheadings listed in sections 19AAC and 19AABB of the Bill and provides a detailed customs tariff schedule of relevant goods.

The excise and excise-equivalent customs duty rates for all other fuel and petroleum-based products, except aviation fuels, will also be reduced by 50 per cent for six months.

Further changes to fuel and alcohol excise and excise-equivalent customs goods

From 1 July 2023, the Government will implement the following additional changes to fuel and alcohol products:

• Enabling fuel and alcohol businesses with an annual turnover of less than $50 million to lodge and pay excise and excise-equivalent customs duty on a quarterly basis, rather than weekly or monthly as at present. These businesses will lodge returns and pay excise by the 28th day of the month after the end of each quarter.
• Enabling businesses that import fuel and alcohol products for further manufacture or distribution and want to defer payment of excise or excise-equivalent customs duty, to transfer the fuel or alcohol straight into a warehouse administered by the Australian Taxation Office (ATO) once the products have gone through ABF customs clearance. The ABF will still collect tax on direct imports.

The Government has also announced that it will streamline and align licensing requirements across the excise system by:

• Removing all renewal requirements for excise and excise-equivalent customs goods licences, removing licence fees, enabling the ATO and ABF to issue entity-level licences in addition to site-level licences, and providing blanket permission to move goods between sites controlled by licensed businesses.
• Removing onshore producers of crude oil and condensate from the excise system until and unless they exceed the relevant production threshold to be liable for excise payments.
• Extending the time limit to apply for a refund of excise overpayments from twelve months to four years after payment to align with refunds of customs duty.
• Creating a public register of excise and excise-equivalent customs goods licences administered by the ATO.

The Budget announcement further amends the excise and excise-equivalent customs duty regime for fuel by:

• Introducing a refund provision, similar to that in the excise law, for excise-equivalent customs duty on petroleum-based oils used in the further manufacture of petroleum lubricants, ending double taxation of these oils.
• Removing the requirement to pay and then claim Fuel Tax Credits in respect of excise or excise-equivalent customs duty on fuels used in domestic, commercial shipping (‘bunker fuels’), thereby aligning their treatment with the duty-free treatment of bunker fuels for international voyages.
• Setting a single rate for businesses to calculate and claim Vapour Recovery Unit refunds.

Finally, the Budget will amend the excise law to provide a targeted exemption from excise licensing requirements, up to a threshold of 10,000 litres per year, for licensed hospitality venues to fill beer from kegs into sealed, non-pressurised containers of no more than 2 litres capacity and not designed for medium- to long-term storage (‘growlers’).

Australia-UK Free Trade Agreement

The Budget also provides funds for the implementation of the recently signed Australia-UK Free Trade Agreement (AUKFTA), costing $171.7 million over four years. This FTA will make Australian exports to the UK cheaper and allow Australians to save money on British imports into Australia, among a host of other anticipated benefits which will facilitate strengthened economic and cultural exchange between Australia and the UK.

For further information on the AUKFTA, please see our previous article following the signing of the agreement in December 2021.

Comprehensive Strategic Partnership with India

The Budget provides the Department of Foreign Affairs and Trade with $245.5 million over five years from 2021-22 for initiatives to support the Comprehensive Strategic Partnership with India, with a range of initiatives to build economic, trade and investment and regulatory links between Australia and India, advance regional cooperation on maritime shipping, disaster resilience and information sharing, and support resources and critical minerals supply chain links.

This funding will also include the establishment of an Australian High Commission in Malé, Maldives, to support economic and security priorities in the Indian Ocean region.

Other customs matters

• The Budget also provides for the Department of Industry, Science, Energy and Resources to undertake a comprehensive review of Australia’s tariff concession framework with a view to reform tariff concession arrangements and the current Duty Drawback system.
• Additionally, as part of the Budget measures and Australia’s COVID-19 response, the Government has announced it will forgo receipts of $6.9 million over four years from 2022-23 to make permanent the temporary tariff concession that is currently in place for certain medical and hygiene products to treat, diagnose or prevent the spread of COVID-19. This measure will apply from 1 July 2022 with the range of products to which the concession applies to be expanded and the end-use restriction removed.

How can Rigby Cooke Lawyers help?

If you would like to discuss the above Budget measures, please contact the Customs & Trade team.

Reference
1. Budget Paper No.2 – Budget Measures
2. Minister for Trade, Tourism and Investment – Media Release 29 March 2022
3. Australian Customs Notice No. 2022/17 (to be published shortly).