Is it illegal to grow tobacco?
Yes, growing, manufacturing or producing tobacco in Australia is illegal unless you have a valid excise licence from the Australian Taxation Office (ATO).
Applicants for an excise licence must adhere to strict requirements and conditions. The excise licence and duty are integral to regulating tobacco production and supply in Australia and collecting revenue from the tobacco industry. Notably, as of the time of writing, no legal tobacco manufacturing is taking place in Australia.
As the importation and sale of tobacco are a significant source of revenue for the Commonwealth government, illicit tobacco trade is treated very seriously, and the Commonwealth Director of Public Prosecutions will prosecute anyone who illegally trades in tobacco.
If you are facing charges for producing illicit tobacco or engaging in the illicit tobacco trade, consult an experienced lawyer who understands the Customs Act 1901, Taxation Administration Act 1953, the Commonwealth Criminal Code and relevant asset confiscation legislation.
What is illicit tobacco?
Tobacco is illicit when it is grown, manufactured or produced in Australia without a valid excise licence. It is also illicit if tobacco is imported domestically without paying customs duty.
Trading in illicit tobacco includes the unlicensed production of tobacco plants or leaves or the manufacture of tobacco products. This includes illicit tobacco crops, cigarettes, cigars, snuff, loose tobacco (known as ‘chop-chop’), and tobacco leaf and plant matter.
Changes to Tobacco Importation Offences in Australia
In July 2019, the Australian Government introduced tighter regulations on the tobacco importation process. Under these changes, individuals or organisations importing tobacco or tobacco products must apply for a permit issued by the Australian Border Force.
Once tobacco arrives in Australia, importers must also pay customs duty and taxes to the Department of Home Affairs, including the Australian Border Force Division (Home Affairs).
Penalties for illegal tobacco trade
The trade, sale and possession of illicit tobacco products are serious offences. Although most commonly associated with manufacturing and distribution, the importation of tobacco products is also considered illicit if importation processes have not been followed.
The Treasury Laws Amendment (Illicit Tobacco Offences) Bill created a tobacco offence regime in which amendments to the Taxation Administration Act 1953 increased the penalties for illicit tobacco offences.
There are severe penalties for breaching customs and excise duties payable on tobacco, including:
- A civil penalty (issued by infringement) is 100 penalty units for possession of more than 2 kilograms of illicit tobacco (this does not apply for possession for personal use) (295‑75 Taxation Administration Act 1953).
- Reasonable suspicion of possession or sale of illicit tobacco offences:
- For 5 kilograms or more, the penalty is the greater of 200 penalty units or 5 times the amount of duty owed (308‑20, 308‑35 Taxation Administration Act 1953.
- For 100 kilograms or more, the penalty is 2 years imprisonment and/or the greater of 500 penalty units or 5 times the amount of duty owed (308‑10 Taxation Administration Act 1953).
- For 500 kilograms or more, the penalty of 5 years imprisonment and/or the greater of 1000 penalty units or 5 times the amount of duty owed (308‑10, 308‑25 Taxation Administration Act 1953).
- Fault-based offences for possession, manufacture or production of illicit tobacco:
- For 5 kilograms or more, the penalty is the greater of 500 penalty units or 5 times the amount of duty owed (308‑120, 308‑135 Taxation Administration Act 1953).
- For 100 kilograms or more, the penalty is 5 years imprisonment and/or the greater of 1000 penalty units or 5 times the amount of duty owed (308‑115, 308‑130 Taxation Administration Act 1953).
- For 500 kilograms or more, the penalty is 10 years imprisonment and/or the greater of 1500 penalty units or 5 times the amount of duty owed (308‑110, 308‑125 Taxation Administration Act 1953).
The penalty amount is calculated as a multiple of a penalty unit. For offences occurring from 1 July 2023, a penalty unit is $313.
Tobacco law enforcement agencies
The Illicit Tobacco Taskforce (ITTF) was established on 1 July 2018 as part of reforms to enhance the ATO and partner agencies’ capacity to protect Commonwealth revenue by investigating serious organised crime syndicates dealing in illicit tobacco.
The ITTF draws on the capabilities of the ATO, Australian Border Force, Department of Home Affairs, Australian Criminal Intelligence Commission, Australian Transaction Reports and Analysis Centre, Commonwealth Director of Public Prosecutions and other law enforcement agencies.
In its first three years of operation, the ITTF detected and seized more than 264 tonnes of illicit tobacco and more than 540 million cigarettes, with an estimated excise value of over $870 million.
Illegal tobacco cultivation and trading in illegal tobacco products can have significant legal and personal consequences. The Commonwealth treats the illicit tobacco trade seriously, and those found guilty may face substantial penalties, including severe financial penalties and potential imprisonment.
