What is illicit tobacco and how is it defined?
Illicit tobacco is a type of organised crime that involves the growth, manufacturing, production, or importation of tobacco into the domestic Australian market without a licence or paying a customs or excise duty or tax on the product.
How illicit tobacco is harmful to the Australian community and economy
The Australian Taxation Office (ATO) estimates that in 2022-23 approximately $2.7 billion in excise revenue from tobacco was lost. That lost revenue could have been invested into essential community services, but instead it was channelled into organised crime.
Ties to organised crime
As stated by ATO Acting Assistant Commissioner Justin Clarke in 2023, those who become involved in supporting the illicit tobacco industry are “supporting organised criminals to fund other significant criminal activities”.
Since 2016, Australia has not permitted the production of tobacco, and per the ATO’s wording, at present “no one is licensed to grow or manufacture tobacco seed, plant, or leaf for commercial sale or personal use”. Thus, any Australian who purchases illegal, black-market tobacco (also known as ‘chop-chop’ tobacco) is in fact contributing to and helping fund organised crime.
How the ATO and its partners combat illegal tobacco
To succeed in its goal of halting illegal tobacco growth in Australia, the ATO undertakes a variety of actions and partnerships, which includes conducting investigations and audits and collecting information and evidence to seize and destroy illegal tobacco crops and prosecute offenders under the Criminal Code Act 1995, Excise Act 1901, and Taxation Administration Act 1953. The ATO also works with partner agencies such as the Illicit Tobacco Taskforce (ITTF).
What is the Illegal Tobacco Taskforce?
Established in July 2018, the Illicit Tobacco Taskforce (ITTF) operates under the jurisdiction of the Australian Border Force (ABF) and is charged with protecting Commonwealth tax revenue by investigating, dismantling, and prosecuting organised crime groups that profit from the sale and trade of illicit tobacco.
The ITTF is able to obtain guidance and assistance from the ABF, as well as the ATO, the Commonwealth Director of Public Prosecutions (CDPP), the Department of Home Affairs, the Australian Transactions Reports and Analysis Centre (AUSTRAC), and the Australian Criminal Intelligence Commission (ACIC).
Common signs of tobacco growth
To help Australians identify and report illegal tobacco plants, the ATO created an illicit tobacco infographic that explains both the visual characteristics of a tobacco plant as well as signs of a potential illegal growth operation. This includes details such as the following:
- The appearance of irregular earthworks along rivers or creeks
- Particularly intense labour production occurring between the months of November and May
- An atypical and potentially illegal use of water resources
- A noticeable and acute smell of tobacco, as well as unexpected quantities of loose tobacco
- Land lease requests being made towards farmers, real estate agents, or landowners
Reporting suspicions and the importance of tip-offs
According to the ATO, one of the leading ways the organisation learns about “suspected fraud or other concerning behaviours” is through community tip-offs, which can be made anonymously either by phone (by calling 1800 060 062) or by filling out a tip-off form either on the ATO’s website or on the ATO’s app.
Current penalties
The current penalties for tobacco-related offenses are determined by the Treasury Laws Amendment (Illicit Tobacco Offenses) Bill 2018, which calculates the penalty amount in multiples of a penalty unit. For any infringement made either on or after 7 November 2024, the penalty unit amount is set to $330. At present, the penalties for illicit tobacco are broken up into five activities, each with its own accompanying penalty:
- Possessing more than two and less than five kilograms of tobacco
- Possessing five kilograms or more of tobacco
- Selling illicit tobacco products
- Buying illicit tobacco products
- Manufacturing or producing illicit tobacco
Key takeaways
Growing, manufacturing, and selling illicit, black-market tobacco in Australia not only hurts Australians by denying the country taxable revenue that could be put to good use in any number of social services, but it also enables organised crime and helps them fund further criminal activities.
It can also have severe financial consequences for anyone found guilty of buying or selling illicit tobacco. As noted by the ATO, the penalty, if convicted, can result in both ten years of imprisonment and fines as high as $495,000.
