Those in the supply chain are subject to extensive legislative and other regulatory controls. There is debate on the ways in which those controls are imposed and varied, especially in relation to the measures to address imported illicit tobacco.
The issue has entered the political arena, with the federal government’s opposition in Parliament claiming that the existing legislative and regulatory arrangements were not achieving their intended outcomes. It argues that better outcomes could be served by eliminating the restrictive regime on tobacco imports and reducing import duties, thereby enhancing the ability of legitimate parties to conduct trade and reducing the incentive for illicit activities.
On 10 September 2026, the federal government ’doubled down’ on the existing regime with the introduction of a Bill containing proposed amendments to the venerable Customs Act 1901 (Act), aimed at augmenting the existing regime and imposing additional obligations on those in the legitimate supply chain, as well as increasing liabilities on those in the illicit supply chain.
While some of the proposed amendments regarding the licensing of licenced customs brokers and operators of premises licensed by the Australian Border Force (ABF) had been the subject of preliminary discussions with industry associations representing those licensed parties, the other provisions in the Bill had not been discussed with industry, having been described as Cabinet-in-Confidence until introduction into Parliament.
The Bill to amend the Act is the Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 (Bill). It was introduced by the federal government into the House of Representatives on 10 September 2026 by the Minister for Home Affairs. The Parliamentary website provides the Bill, an Explanatory Memorandum, a Bills Digest and the transcript of the first and second readings of the Bill.
According to the Bills Digest, in his second reading speech, the Assistant Minister for Citizenship, Customs and Multicultural Affairs, Julian Hill MP, characterised the Bill as “the most comprehensive modernisation of Australia’s illicit-tobacco customs enforcement framework since 2018, ensuring laws designed for a very different illicit tobacco market keep pace with increasingly sophisticated criminal enterprises”.
The Bill follows extensive consideration of the impact of the illicit tobacco industry, including a Senate review conducted in late 2025, which noted that although tobacco consumption had declined, a significant proportion of purchases were from illicit sources. The ongoing criminal activity associated with the illicit tobacco industry has placed additional pressure on state and federal governments to take further action against those involved in the illicit tobacco trade.
The ABF has provided some guidance to industry which includes the following comments among a lengthy summary of the Bill.
“The Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026 strengthens Australia’s ability to combat illicit tobacco trafficking, disrupt organised criminal involvement in the tobacco market and protect the integrity of legitimate supply chains. The Bill also improves the effectiveness of proceeds of crime investigations and asset confiscation powers. The Bill amends the Customs Act 1901 and the Proceeds of Crime Act 2002.”
Further, the material released by the ABF describes the key aims of the Bill:
- are intended to amend illicit tobacco offences to better target contemporary criminal methodologies and organised crime involvement in the illicit tobacco market;
- close identified legislative gaps that create opportunities for the diversion of tobacco products into the illicit market;
- improve the efficiency of customs seizure, forfeiture and disposal processes for illicit tobacco products;
- strengthen the integrity of Australia’s tobacco supply chain through statutory tobacco-related obligations for customs brokers, depots and warehouses, and expand the National Customs Broker Licensing Advisory Committee to include depots and warehouses, now titled the National Customs Licensing Advisory Committee; and
- enhance the Commonwealth’s ability to identify, restrain and confiscate the proceeds and benefits of criminal activity.
The material released by the ABF provides some detail regarding the likely impact on the illicit supply chains and is at pains to state that the additional compliance obligations will not significantly affect existing compliant operators.
However, from our perspective, even while recognising the adverse consequences of the illicit tobacco industry, we are concerned on the impact on those parties in the legitimate supply chain. Those parties are already subject to significant obligations, which are costly to implement and maintain. The number of licensed customs brokers is already declining, and increasing obligations and liabilities may cause existing licensed customs brokers to leave the profession while also deterring others from joining the profession.
At the very least, these amendments will take time to carefully review and discuss with the ABF. Terms and conditions of trade will require rigorous examination, as will insurance policies. Members of the legitimate supply chain will once again need to review their practices and amend existing procedures or introduce ones. They will also bear an increased burden and greater risks in their businesses to comply with government policy.
We will work with the International Forwarders and Customs Brokers Association to review the Bill when it is released, participate in discussions with the ABF, and provide advice to industry regarding the Bill’s provisions and the additional steps required to advance compliance.
Contact us
For further information, or to discuss the draft legislation and the potential impact on your business, please contact a member of our Customs & Trade team.
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