ABF customs enforcement priorities revealed

Australian Border Force’s Goods Compliance Update 2024

On 4 October 2024, the Australian Border Force (ABF) released its latest Goods Compliance Update, which reveals the ABF's recent areas of focus in customs law enforcement and compliance activities. In this article, we discuss four key points from the ABF update.

1. Noticeable increase in reporting errors

Recent findings from the ABF’s Compliance Monitoring Program (CMP) indicate an increased rate of errors over the past financial year compared to the prior financial year, with certain areas consistently ranking as the most frequent errors each month. These areas are:

Tariff Classification: Imported goods must be classified under the Customs Tariff Act 1995. Frequently identified classification errors, appear to indicate a failure to obtain enough details about the goods to enable their correct classification.
Invoice Term Type: The Invoice Term Type represents the trading terms under which goods are sold, defining the obligations, costs, and risks between the buyer and seller. These ‘terms of trade’ clarify which costs and responsibilities are borne by each party and indicate the need to adjust the price on the import declaration to obtain an accurate customs value.
Valuation Date: The valuation date is the date the goods are exported from the overseas country and is the date relevant to rate of exchange used to convert the customs value to Australian dollars where goods are invoiced in a foreign currency.
Delivery address: Accurate address details are mandatory for import declarations. The delivery address must reflect the final destination of the goods, and as such an intermediary address, such as a depot or logistics provider address is not appropriate, unless a single consignment is delivered to multiple customers or to the importer.

With the exception of the delivery address, each of these errors can give rise to over or under payments of customs duty and GST. Given the ABF can apply penalties for errors even when there is no loss of duty, this is a worrying trend for importers.

Errors can be rectified by lodging a voluntary disclosure with the ABF which, provided this is done before the ABF exercises its monitoring powers, protects the owner from possible infringement notices and/or penalties being imposed by the ABF.

2. Voluntary compliance and benefits to importers

In the last three years, the ABF’s Voluntary Disclosure Intervention (VDI) team has significantly increased in-person industry engagement to actively promote the benefits of voluntary compliance.

Under sections 243T and 243U of the Customs Act 1901, full and accurate disclosures can protect against prosecution or the application of administrative penalties. Failure to voluntarily disclose and/or amend the errors or omissions constitutes the making of a ‘false and misleading statement’ under customs law and may result in penalties if the ABF chooses to conduct an audit, with the maximum penalty of AUD $18,780 (based on current penalty unit value) or 100 per cent of the duty short paid per false and misleading statement (i.e. per import transaction).

Common types of errors or omissions that can prompt a voluntary disclosure include:

Valuation adjustments
Transfer pricing adjustments
Incorrect tariff classification
Incorrect application of a tariff concession order
Related party indicator errors
Incorrectly claimed refunds and/or drawbacks.

Protection from prosecution and penalties apply from the time a letter of ‘intention’ to disclose a voluntary disclosure is submitted. Since 2014, the VDI team have actioned 757 cases where importers have been protected from penalties. In the last three years, the ABF has noted that the number of VDI cases annually where industry has been protected from penalties has increased by more than 87 per cent.

3. New Mutual Recognition Agreements with Indonesia and India

On 7 August 2024, the ABF and Indonesia’s Director General of Customs and Excise signed Australia’s 11th AEO MRA. This agreement will streamline customs processes and offer Australian Trusted Traders faster, more efficient, and more secure access to Indonesia, Australia’s 13th largest trading partner. With Indonesia expected to become one of the world’s ten largest economies by the mid-2030s, the MRA is set to deliver substantial economic and security benefits.

Similarly on 18 April 2024, the Australian and Indian customs officials, signed the Australia-India Authorised Economic Operator (AEO) Mutual Recognition Arrangement (MRA). AEO MRAs are agreements between customs administrations with equivalent AEO programs, developed under the World Customs Organization's (WCO) SAFE Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework). This aims to provide mutual trade facilitation benefits, supporting Australian Trusted Traders in accessing one of the fastest growing economies in the world.

The agreement is expected to drive an estimated $588 million growth in trade to Australia over the next decade, enhancing supply chain security and offering diversified market opportunities for Australian traders. Commissioner Outram emphasised the significance of the MRA in strengthening customs relationships between Australia and its sixth-largest trading partner, India.

What does this mean for Australian international traders?

The signing of the two AEO MRAs with India and Indonesia in 2024 will strengthen customs cooperation with two of Australia’s key trading partners and enhance trade facilitation, security, and market access for Australian Trusted Traders.

By signing the AEO MRA, both countries agree to treat each other's accredited businesses as ‘low-risk’ and grant preferential treatment at the border.

This means Australian exporters that are Australian Trusted Traders will enjoy benefits such as:

Reduced incidents of border inspections and, where selected for inspection with other goods, priority inspection
Priority clearance
Simplified customs documentation.

These benefits can be critical when trying to customs clear goods which are urgently needed or those which don’t travel well during extended delays such as food and pharmaceutical products. Australian businesses are encouraged to join the Australian Trusted Trader program (or the equivalent in Indonesia and/or India) to benefit from these arrangements.

4. Engineered stone ban

A widely publicised ban on the importation of engineered stone benchtops, slabs, and panels will take effect on 1 January 2025, with the aim of protecting worker health and safety. This Commonwealth-level prohibition strengthens border controls, as most engineered stone products are imported into Australia. It follows the world-first domestic ban on the use, supply, and manufacture of these products in Australia, which began on 1 July 2024. The measure is aimed at preventing silicosis, a lung disease caused by exposure to respirable crystalline silica, which has resulted in a number of deaths in Australia.

How BDO can help

BDO’s experienced customs, international trade and excise team can provide businesses with support in:

The preparation and lodgement of a letter of intent to commence the voluntary disclosure process
The preparation and lodgement of a voluntary disclosure
Obtaining any other necessary rulings or advice from the Australian Border Force
The Australian Trusted Trader application and accreditation process to take advantage of this and other MRA’s under the AEO model
Reviewing your international supply chain to be sure your business is taking advantage current free trade agreements and customs concessions to reduce customs duty liabilities.