Businesses, Agents and Trade Professionals

Approach to trade and goods compliance

The Australian Border Force (ABF) - as our operational arm - is responsible for protecting Australia’s border and managing the movement of people and goods across it.

Our approach to trade and goods compliance provides clarity and direction on the overarching intent of trade and goods compliance activities performed by the ABF.

Our approach aligns with key Departmental documents including Strategy 2020 (1.47MB PDF), ABF 2020 (1.96MB PDF), and Corporate Plan 2015 - 2019 (1.24MB PDF). It replaces the Australian Customs Service’s Regulatory Philosophy.

Summary

A summary of our Approach to Trade and Goods Compliance (80KB PDF) is available.

Objective

Our objective is to foster and enable high levels of voluntary compliance while dealing effectively with those who do not comply with Customs-related law.

We will achieve this through:

  • providing timely information, guidance and advice
  • where appropriate, advising industry in advance of our areas of focus
  • working collaboratively with industry
  • automating low-risk, high-volume transactions so that resources can be allocated to areas of higher risk
  • increasing our digital capabilities, including self-service identity/entity verification
  • being open, fair, transparent and nationally consistent with our compliance activities
  • intelligence-informed, risk based compliance activities
  • treating non-compliance on an entity basis (as opposed to a transactional basis)
  • responding proportionately to non-compliance
  • working with external regulatory, intelligence and enforcement bodies through information sharing and joint activities.

Our objective reflects our role in the trade and goods environment, of facilitating legitimate trade and enforcing Customs-related laws.1

  1. "Customs-related law" means the Customs Act 1901; Customs Tariff Act 1995; Customs Tariff (Anti-Dumping) Act 1995; regulations and instruments made under those Acts; Excise Act 1901 and regulations made under that Act; A New Tax System (Goods and Services) Tax Act 1999 and regulations under that Act; section 72.13 of the Criminal Code; Division 307 of the Criminal Code; or any other Act, regulations, or legislative instrument in so far as they relate to the importation or exportation of goods or impose any tax, duty, levy or charge (however described) in connection with import or export.

Environment

Our framework is designed to ensure that we are working ahead, at, and after the border to facilitate legitimate trade and to deter and prevent non-compliance.

The trade and goods environment is characterised by substantial growth in volumes and complex supply chains and trade rules. Over the four year period from 2014/15 to 2018/19 it is expected that air cargo consignments will increase by 26 per cent and sea cargo consignments will increase by 14 per cent.2

Supply chains are becoming more complex as goods are sourced and transported from all corners of the world. As stated in the ABF 2020 document, developing economies are increasing their share of global trade and as a result, Australia will develop stronger trade relationships with many diverse countries.

Traders also expect streamlined processing. Expected increases in e-commerce will place pressure on the trade and goods regulatory system as buyers expect their products to be delivered within short timeframes.

Trade rules are also changing with the introduction of more bilateral and multilateral preferential trade agreements, such as free trade agreements. Each of these agreements are unique and we have a dual role of trying to encourage their utilisation through advice services, while ensuring that the agreements are not wrongly applied.

The introduction of the Australian Trusted Trader (ATT) programme will fundamentally change the way trade is treated at the border. It is the future direction of border management in Australia and is focused on co-regulation and partnership with industry. The ATT programme supports the Department’s shift from a transaction based approach to managing risk on an entity basis. This will lead to differentiated treatment of Trusted Traders, and the approach to managing them.

  1. ABF 2020, pg. 13

Movement of goods and the supply chain

The supply chain involves a number of interdependent entities and is an inherently complex and dynamic environment. We design controls to minimise risk across the whole of the supply chain to provide assurance that the entities involved in the movement of goods are operating compliantly.

We achieve this through utilisation of intelligence outputs and by developing a comprehensive understanding of compliance risk areas and vulnerabilities. This requires us to engage with entities across the whole of the supply chain to address potential risks.

Our compliance controls and mechanisms are designed to deliver on government intent. Our activities have been designed to address non-compliance and increase levels of voluntary compliance. We constantly monitor and evaluate their effectiveness.

Risks

In the trade and goods compliance environment there are three key risks that we manage: regulated goods, economic harm, and supply chain integrity.

We have in place dedicated organisational functions that consider both the national governance of trade and goods compliance risks from a national perspective, through to the operational execution of compliance activities to mitigate these risks.

Regulated goods

We are responsible for managing threats arising through trade in prohibited, restricted, and regulated imports and exports. This includes protecting the Australian community, and upholding international commitments aimed at protecting health, safety, the environment, and cultural heritage.

Economic harm

As the lead agency for revenue collection at the border, we are well placed to identify and treat non-compliance with revenue and trade rules. This includes undervaluation, misuse of concession schemes and circumvention of trade remedies, such as anti-dumping and countervailing measures. These trade rules exist to protect the integrity of Australia’s market competition, and ensure the benefits flow through to the Australian economy, consumers, and investors.

We are also responsible for protecting Australian importers, distributers, and manufacturers of goods protected under trademarks, copyright, protected Olympic expressions, or protected indicia and images from counterfeit, pirated, or unauthorised importations.

Supply chain integrity

To ensure the safekeeping of cargo moving through the supply chain, we need to ensure that reporting requirements are met, cargo is accounted for and does not include additional or illicit items, and the movement of cargo is conducted under controlled circumstances.

Compliance activities and responses

To facilitate legitimate trade and deal effectively with non-compliance, we perform compliance activities ahead of, at, and after the border.

Ahead of the border

Engaging with industry

We engage with industry, partner government agencies and our overseas counterparts to raise the overall level of awareness of Australia’s border laws. This contributes to informed compliance and mitigates the risk of non-compliance occurring prior to goods leaving the country of export. Treating risks ahead of the border is less resource intensive for us and industry, and provides the ultimate protection to the economy and community.

Advice

We provide valuation, origin, and tariff advice to Australian importers and their representatives. This is a free service provided by us and provides for private, binding rulings that give certainty to importers before importation.

At the border

Risk assess

We risk assess all goods at the time a declaration or cargo report is submitted, and before the goods are delivered or clearance is given. This assessment of the goods and the associated documents allows us to treat risks before they are imported or exported in or out of Australia.

Inspection and examination

To ensure the integrity of goods under customs control, we undertake programmed (overt) and covert examinations of goods prior to them entering home consumption. We also check that reporting requirements have been met, and perform physical inspections of areas that house goods under customs control including depots, warehouses, and air and sea ports to ensure compliance with licensing and legislated obligations.

Assurance

We also assess a sample of all import and export declarations and cargo reports to monitor the accuracy of submissions to the Integrated Cargo System. Information and analysis arising from this work is used to assess overall compliance, measure revenue leakage, and to identify emerging compliance issues.

After the border

Audits

We perform focused, post-clearance assessments, including desktop and field-based activities of import and export declarations and associated records. We are also responsible for ensuring that industry is complying with the legislated requirements for the following schemes and arrangements:

  • Refunds – we assess targeted refund applications to ensure compliance with regulations and rules of trade (not including non-trade related refund schemes such as the Tourist Refund Scheme). This includes ensuring compliance with concession schemes and free trade agreements.
  • Drawbacks – we assess applications for the Duty Drawback Scheme. The scheme assists exporters to obtain a refund of customs duty paid on imported goods where those goods are exported unused, or treated, processed, or incorporated into other goods that are then exported.
  • Temporary Imports – we assess the nature of goods to determine whether the goods qualify for temporary import status. For some goods it is necessary that a security is paid—usually equivalent to the taxes applicable to the good—until the goods are re-exported.

Compliance behaviours

We recognise that behaviours fall on a spectrum ranging from compliant to simple error, indifference to intentional or criminal non-compliance.

Entities that self-regulate and maintain a high level of compliance with Australia’s border laws can expect a more seamless border processing experience and little interaction with us. Entities that are unknowingly non-compliant or seek to comply will be provided with assistance and guidance from us. Those who decide to not comply with Customs-related law, or are deliberately non-compliant or are criminal, experience greater intervention at the border and thorough investigations, and the potential for prosecution by us.

We have an array of compliance responses available to us, ranging from education and awareness, to monitoring, to prosecuting non–compliance. All of our responses are aimed at encouraging greater adherence to Australia’s Customs-related laws.

Education and awareness

Promoting greater education and awareness is our most utilised, cost effective, and efficient compliance response available. It mitigates the risk of entities that genuinely want to comply from becoming unknowingly non-compliant. It also enables us to focus our enforcement and auditing resources on those within the supply chain who decide not to comply with the law, are deliberately non-compliant, or are criminal.

We provide targeted letters, newsletters, notices, presentations, and online guidance to industry to increase awareness of border-related legislation and our compliance expectations. We also engage actively with industry through collaborative forums such as the Trade and Goods Compliance Advisory Group.

Warnings

For first and/or minor offences it may be appropriate to issue a warning for a breach of Customs-related laws. This provides the entity with the opportunity to correct their processes and put systems in order to mitigate the risk of future breaches.

Increased intervention

Where entities have a poor history of compliance we may choose to target their goods more often, request more documentary evidence, or perform more inspections of their premises. For example, if an entity is known to have imported a dangerous good we will increase our targeted intervention on that entity until we are satisfied that the risk has been mitigated.

Administrative penalty

The Infringement Notice Scheme (INS) is an administrative enforcement remedy that may be utilised where there are reasonable grounds for us to believe that an entity has committed certain strict liability offences under the Customs Act 1901. It is a valuable enforcement and regulatory tool that provides a time and cost-efficient outcome for us and the subject of the investigation. The recipient of an infringement notice has the option of resolving the matter immediately by paying the penalty specified in the infringement notice or having the matter determined by the relevant court. The payment of an infringement penalty is not an admission of guilt and no criminal conviction is recorded. Infringement notice penalties are significantly less than the penalties that a court could otherwise impose.

Suspension/cancellation of licences

Where applicable, for more serious and/or systemic offences, we will consider recommending the suspension or cancellation of licences. We licence depots, warehouses, and customs brokers. The suspension or cancellation of licences impacts significantly on an entity.

Prosecution

Where an offence is significant or systematic, or an infringement notice is not paid, and evidence is available to provide reasonable prospects for a prosecution, consideration will be given to prosecution of an offence through the courts, in accordance with the Prosecution Policy of the Commonwealth.

Considerations for responses

In deciding the most appropriate regulatory response to non-compliance, ABF officers will take into account the following:

Compliance history

Whether there have been other recent instances of non-compliance by the entity of a similar nature and whether enforcement actions were taken against the entity. The ABF officer will also take into account whether the non-compliant action indicates systemic issues that may pose ongoing compliance concerns.

Level of intent

Whether the breach was as a result of lack of knowledge or wilful intent and whether the entity displayed a willingness to comply with Customs-related law.

Mitigating circumstances

Consideration of any mitigating circumstances, for example, late changes in carrier details that impact on reporting timeliness.

Corrective actions

Whether the entity has rectified the cause of the breach, or whether a satisfactory plan has been put in place to rectify the cause.

Impact on the community and/or the economy

Whether the breach resulted (or could have resulted) in the Australian community and/or economy being exposed to an unacceptable level of risk.

Impact on the regulatory process

For example, consistent poor quality of reporting impacts on our ability to adequately risk assess goods and creates a burden on operational resources that could be better used on deliberate and criminal entities.

Cooperation and disclosure

Whether the entity has been transparent and forthright in its interactions with the ABF and other Government agencies involved in legislating and regulating the movement of goods across our border, such as Permit Issuing Agencies.

Further information

For more information on trade and goods compliance, see: