Removing red tape for importers and assisting Ukraine

As part of its aim to facilitate trade and international relations, the Government has announced its intention to both:

• Permanently abolish 457 nuisance tariffs from 1 July 2024
• Extend the customs duty exemption for goods produced or manufactured in Ukraine for two years until 3 July 2026.

The abolition of the 457 nuisance tariffs marks the largest unilateral tariff reform in two decades and is intended to boost productivity, facilitate legitimate trade and reduce compliance costs.

The current framework and proposed changes

Under the Customs Tariff Act 1995 (Cth) (CTA), Schedule 3 and Schedules 4A to 15 currently impose various rates of duty on a wide range of goods imported to Australia, including toothbrushes, hand tools, fridges, dishwashers, clothing and menstrual and sanitary products.

To streamline the importation of these products, the Government’s measures will permanently set to ‘free’ the rate of duty within Schedule 3 and Schedules 4 to 15 (inclusive) of the CTA. These tariffs have been identified by the Simplified Trade System Implementation Taskforce as a nuisance to Australian businesses, imposing unnecessary administrative costs and compliance burdens. It is anticipated that abolishing these 457 nuisance tariffs will streamline the importation of $8.5 billion worth of goods annually and decrease receipts by $41 million over the next five years from 2023-24.

Separately, whilst goods produced or manufactured in Ukraine on or after 4 July 2022 are currently eligible for a duty exemption under the original measures, the extension of these measures until 3 July 2026 will ensure that most goods produced in Ukraine and imported into Australia will remain exempt from customs duty (excluding goods such as alcohol, fuel, tobacco and petroleum products which will remain subject to excise-equivalent customs duty).

BDO comment

BDO welcomes the Government’s abolition of these nuisance tariffs as this will reduce unnecessary red tape on goods that are often already duty-free under a tariff concession instrument or where a free trade agreement applies.

The intention in entering into successive free-trade agreements is to facilitate foreign investment and remove compliance burdens. However, were these nuisance tariffs to remain, businesses under the current framework would continue spending unnecessary time and resources proving their imports are eligible under existing concessional tariff arrangements or passing the relevant free trade agreement tests.