Licensed customs brokers and acts outside of Australia April 2019
Topics • Position of the DHA • The law regarding licensing • Alternative view • What you can and cannot do from outside AU • Risks • Reform
What is the issue The lodgment of import declarations via the ICS by an individual physically located outside of Australia at the time of lodgement
DHA position From ABF “About Customs Brokers” website Once licensed, a customs broker may operate from any place within Australia or such places specified on the licence. As the licence only operates to allow a customs broker to operate in Australia they cannot operate or lodge entries from a place outside of Australia (overseas). From FTA industry update The current legislative position is that licensed customs brokers must be Australian residents and Australian corporations. Although current systems allow for access from overseas the person lodging import declarations must be a licensed customs broker physically located in Australia. If brokers are lodging import declarations from overseas then they … may be referred to the National Customs Brokers Licensing Advisory Committee for investigation. If referred, then the Comptroller-General may suspend their licence pending the investigation and report.
The law – Licensing of customs brokers Section 183C - Licenses are granted to act as a customs broker at a specific place
Why is “place” relevant Section 181 – who can act as the agent of the owner • If a place has been specified by Customs, an owner of goods shall not authorize someone to be there agent for the purposes of the Customs Act at that place unless the person is • an employee of the owner; or • a customs broker at that place Licensed brokers have a privileged position of being able to act as agents of owners However, that privilege is tied to acting at specific places
Historical Up until 2005 these were the places where a broker could be licensed to act
The Band-Aid solution Customs recognized that a system of nominated places did not work in an online environment The solution should have been to change the physical location based licensing system Instead of addressing this problem, in 2005 the CEO of Customs declared that the relevant place was “all places in Australia” It was a Band-Aid solution with the following outcomes: 1. the current legislation is irrelevant as it is still location based licensing, but the location is the whole of Australia 2. we are still tied to a physical location system in a world where everything is done online
The flow on to the licensing of customs brokers • Customs broker licenses typically nominate the “place” as “all places in the Commonwealth” - meaning the Commonwealth of Australia • A nominee must be licensed to be a customs broker at the place where the corporate broker is licensed • Licenses can be varied so that a nominated place is removed or a new place is added The whole licensing system is based on a premise that brokers will have a single office and lodge entries manually at a customs office
End result – as viewed by Customs • You are licensed to act as a customs broker in all places in the Commonwealth • This means that you can only act as a licensed customs broker inside the territory of Australia • Acts performed outside of Australia are not acts of a licensed customs broker • Customs would argue that a lodgment outside of Australia is in breach of section 181(4) as it is not by a licensed customs broker or an employee of the owner It is a very narrow view and does not facilitate trade
Alternative view • Section 181(2) provides that: • an owner can authorize a person to be his/her agent at a place • the person authorized can be a customs broker at that place The relevant place will be the Commonwealth of Australia. All licensed customs brokers are licensed to all placed within Australia. This is not altered by some of there functions are performed outside of Australia.
Alternative view The questions for a Court would be: • is the “at a place” requirement a reference to: – the customs broker physically performing functions at that place, or – the customs broker being licensed for the purpose of the Customs Act “at that place” • if the former, does a person cease to be a customs broker at a particular place because a particular function is performed online from a location outside of Australia? Is the requirement met via being licensed at the place or physically acting at the place
What can you not do from outside Australia To what does the Australian location restriction apply to: • the use of the ICS (you only have access to this in your capacity as a licensed customs broker): • this would including lodging import declarations; • lodging refund applications; • checking the status of consignments • any act of thing in relation to goods that is required of permitted to be done by the owner of the goods • this is unclear, but appears to be restricted to lodging entries and refund applications
What can you do from outside of Australia • Preparation of entries for review and lodgment by another customs broker in Australia • Correspondence with Customs • Acts that could be perform by an advisor that is not a customs broker Question – Are you doing something which is complying with a provision of the Act or merely: • taking steps in preparation of compliance • seeking to resolve an issue related to compliance
Risks - penalties • A breach of section 181(4) – doing an act on behalf of an owner other than as authorized under section 181 – strict liability – penalty 30 penalty units • Breach of customs broker license • Acting as a broker an a place at which you are not authorized to act • Using the ICS for an unauthorized purpose • strict liability - 60 penalty units • Including false information in the application for a broker’s license (assuming acting outside of Australia was not disclosed)
Risks – Referral to NCBLAC • When can Customs refer a broker to NCBLAC: • ceased to perform the duties of a customs broker in a satisfactory and responsible manner • a false or misleading statement was made in the application for a license • non-compliance with a condition of the license • necessary for the protection of the revenue • otherwise in the interest of the public • Customs may argue that they cannot regulate brokers who act outside Australia and this poses a general risk to the revenue and the public
Other risks • Will your insurance policy cover you • An insurer may argue that lodgments outside of Australia are not part of your activities as an Australian customs broker • Have you agreed to perform acts in compliance with the law under any service agreements
Managing the risk • The position of the law is not clear, but the position of Customs is • If you want to comply with the Customs position: • Advise staff of the requirement that entries only be lodged in Australia • Put in place a written policy regarding work undertaken outside of Australia • Notify staff again of this policy when they are traveling outside of Australia • Monitor lodgments – have any been made by the out of country broker • Use of other nominees: • While entries must be lodged by a broker present in Australia – the out of country broker can prepare the entry • However, the lodging broker should properly review the entry before lodging – it shouldn’t be a rubber stamp • ensure out of country trips are managed so that sufficient brokers remain in Australia
Past non-compliance • There is no obligation to disclose past non-compliance – the broker licensing condition around disclosure relates to the provision of false information • No formal protection for voluntary disclosure (s243T and s243U are not applicable) • You may form the view that there has been no breach and that you meet the requirements of the Act if you are licensed in Australia • Clearly, the ABF will view the matter more favorably if there is voluntary disclosure • Suggest that you investigate any past non-compliance and assess whether it is material – if so, call us
Reform • The Customs Act needs to be changed – it is based on port based registration where paperwork was submitted over a counter • There is good reason why customs brokers should only be Australian registered companies or individuals with their business operated in Australia who have been licensed by Customs • However, what is the policy reason against permitting incidental lodgments by a licensed customs broker outside of Australia: • that customs broker is still subject to governance by the DHA • as an Australian based business, the customs broker can be pursued for duty and fines • the customs broker must still be licensed so the quality of service will not be affected
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