EXPLANATORY STATEMENT

 

Select Legislative Instrument 2008 No. 193

 

Tradex Scheme Act 1999

 

Tradex Scheme Amendment Act 2008

 

Tradex Scheme Regulations 2008

 

Issued by the authority of the Minister for Innovation, Industry, Science and Research.

 

Section 49 of the Tradex Scheme Act 1999 (the Act) provides, in part, that the Governor-General may make regulations prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for giving effect to the Act.

 

Introduced in 2000, the objective of the Tradex Scheme (Tradex) is to allow for the importation of goods without payment of customs duty or other taxes, provided the goods are subsequently exported, or incorporated in other goods that are exported.

 

The Act was recently amended to implement Tradex related recommendations from the Review of the Tradex and Manufacturing in Bond Schemes and four post review proposals. Tradex provides access to up-front exemption from duties imposed by the Customs Tariff Act 1995 for imported goods that are subsequently exported, provided the goods are not inappropriately used or consumed while in Australia. Tradex also provides those goods with access to exemptions from certain other taxes, including the Goods and Services Tax. This is consistent with the international taxation principle that taxes should apply in the country of consumption.

 

The changes to the Act improved the administration of Tradex and decoupled the Act from the provisions of the Customs Regulations 1926 that allow for the drawback of customs duty (the Drawback Regulations). The Drawback Regulations apply in circumstances similar to Tradex, but allow for duties imposed by the Customs Tariff Act 1995 to be paid up-front and refunded after export. As the Drawback Regulations provide duty relief only after export, they are not always expressed in a manner appropriate for Tradex, which provides up-front duty and tax relief on importation.

 

The Regulations ensure Tradex is consistent with the intent of the Drawback Regulations without being dependant on them, and clarifies some administrative changes to the scheme. The Tradex Scheme Regulations 2000 were repealed as they have been superseded by the amended Act and the Regulations.

 

Details of the Regulations are included in the Attachment.

 

The Tradex Scheme Regulations 2008 will have no significant financial implications. The regulations are of an administrative nature and, while they are designed to improve the administration of Tradex, they are not expected to generate significant savings.  

 

Consultation for the original Review which gave rise to the Tradex Scheme Regulations 2008 included relevant stakeholders such as government departments, industry and industry associations.

 

The Tradex Scheme Regulations commenced on 8 October 2008, consistent with the commencement date for the Tradex Scheme Amendment Act 2008.

Attachment

Details of the Tradex Scheme Regulations 2008.

Regulation 1 – Name of the Regulations

This regulation provides the title of the Regulations is the Tradex Scheme Regulations 2008.

Regulation 2 – Commencement

This regulation provides that the Regulations commence on the commencement of Schedule 1 to the Tradex Scheme Amendment Act 2008 (the Act).

Regulation 3 - Repeal

This regulation provides for the repeal of the Tradex Scheme Regulations 2000.

Regulation 4 - Definitions

This regulation provides the definition for Act within the Regulations as being the Tradex Scheme Act 1999.

Regulation 5 - Mixtures

This regulation clarifies how goods considered to be mixtures are treated with respect to the liability to pay tradex duty in certain circumstances and the remission of tradex duty when considered appropriate by the Secretary of the Department of Innovation, Industry, Science and Research. Tradex duty is payable by the importer if goods imported under Tradex are not exported in the specified time. It is an amount equivalent to the Customs duty that would have been payable on the goods at the time they were imported, if those goods had not been entered through Customs using Tradex.

Regulation 6 - Valuation of goods

This regulation provides that if goods are to be valued for the purpose of calculating tradex duty, or a related purpose, they be valued in accordance with Division 2 of Part VIII of the Customs Act 1901, as previously under the drawback regulations.

Regulation 7 – Core criteria – imported goods not to be consumed or used

This regulation provides the core criteria that:

• in order to make an application the Secretary must be satisfied that the nominated goods are not intended to be consumed or used in Australia; and
• a requirement for the holding of a tradex order is the nominated goods have not been consumed or used in Australia.

The criteria effectively mirror the provisions in the drawback regulations.

It clarifies that the definition of consume and use are consistent with that used in the Act.

Regulation 8 – Liability to pay tradex duty – goods ‘consumed or used’

This regulation clarifies the circumstances under which the tradex user will be liable to pay tradex duty if the imported goods are consumed or used. It retains the current interpretation of consumed and used for the purposes of Tradex.

Subregulation 8(2) ensures that traveller cheques that have not been countersigned in exchange for goods, services or cash are not considered as used or consumed for the purposes of the Act and continue to be eligible for access to duty and tax relief under Tradex.

Regulation 9 - Refunds of tradex duty

This regulation clarifies the circumstances under which the tradex order holder can receive a refund of overpaid tradex duty. The ability to refund over paid tradex duty simplifies the previous administratively burdensome mechanism for providing a refund.