ATO ID 2002/637
--------------------------------------------------------------------------------
FOI status: may be released
--------------------------------------------------------------------------------
Status of this decision: Decision Current
--------------------------------------------------------------------------------
ATO Interpretative Decision
CAUTION: This record of an ATO decision is provided for information only and is merely an indication of how the Commissioner applies the law in such circumstances. It may not include a complete statement of all facts in summarising the application of the relevant provision of the law to complex circumstances. If you rely on this decision, and the decision is subsequently found to be incorrect, you are not protected from any penalty. If the relevant provisions, being those in force at the date of decision, have been amended or rewritten, it will be necessary to have regard to the amended or rewritten law. You may wish to obtain further advice from the ATO or from a professional adviser.
Excise
Excise - Collections - Tobacco» - Home growing of «tobacco»
--------------------------------------------------------------------------------
Issue
Will the Australian Taxation Office (ATO) issue excise licences under section 39A of the Excise Act 1901 (EA) to persons who grow «tobacco» and process «tobacco» for smoking where the «tobacco» is to be grown and processed for the person's own personal use?
Decision
While applications for excise licences issued under section 39A of the EA are always considered on their merits, it is unlikely that the ATO would issue such licences in circumstances where the applicant proposes to grow «tobacco» at a domestic residence for personal consumption.
Facts
Advice was sought from the ATO as to whether it would issue excise licences to a person who wishes to grow «tobacco» in the garden of his personal residence for personal consumption.
The applicant proposed to grow, cure and «chop» the «tobacco» at his residence for his own consumption. In order to do this without breaching the EA the person would require a producer licence and a manufacturer licence.
The applicant indicated that he expected that he would not be required to pay excise duty in circumstances where he grew, processed and smoked the «tobacco» himself.
Reasons for Decision
Duty is imposed on leaf «tobacco» at the rate set out in the Schedule to the Excise Tariff Act 1921 . The ATO has no power to grant an exemption from the statutory liability of entities to pay excise duty on excisable «tobacco».
In the event that a person who grows «tobacco» for private use is willing to pay the duty on the «tobacco» he or she produces domestically, he or she may apply under section 39 of the EA for:
(a)
a producer licence to grow the «tobacco»; and
(b)
a manufacturer licence to cut the cured «tobacco» and prepare it for smoking.
The Collector may, under section 39A of the Excise Act, refuse to issue the relevant licences if, for example:
·
the applicant is not a 'fit and proper person';
·
the physical security of the premises is not adequate;
·
the applicant would not be able to keep proper books of account to enable the ATO to adequately audit the books and records;
·
refusal is necessary to protect the revenue.
The following considerations would arise in determining whether to grant excise licences in these circumstances:
·
The security of arrangements at domestic premises are not usually of an adequate standard to protect against theft or accidental loss of the «tobacco», and the cost of arranging security to the necessary standard is not justified where it is proposed to grow a very small amount of «tobacco» for personal use.
·
The EA provides a right of access to ATO offices 'at all times' to check the stock of «tobacco» leaf of a producer or dealer, to examine and take account of the goods and crops, and to take samples of material and partly manufactured excisable goods. For this reason licences are usually issued in respect of premises which are not used as a domestic residence.
·
The comprehensive regulatory scheme contained in the EA is designed to prevent erosion of the excise revenue. The licensing of individual domestic residences for «tobacco» production is contrary to the scheme of the EA as supervising «tobacco» production in a large number of small sites is not viable with regard to the monitoring and auditing functions which are necessary for the protection of the excise revenue.
While each application for an excise licence is determined on its merits it is likely that, having regard to section 39A of the EA and the intention of the legislation, the Collector would refuse to issue excise licences to an applicant who proposes to grow «tobacco» at a domestic residence for personal consumption.
Date of decision: 7 May 2002
Looks like it's possible in some cases to apply for a license to produce your own in special circumstances, but you have to pay duty on what you produce anyway.
BigTrancer
