Now lawCrime & Courts Introduced in the House of Representatives, 10 Sep 2026

Jail terms for moving illegal tobacco are now law

The government says crime gangs run the illegal tobacco trade from start to finish. This law adds new crimes and faster seizures. It sets tougher rules for businesses that store goods coming into the country, and changes how money made from crime is taken back.

Official name: Customs and Other Legislation Amendment (Illicit Tobacco Enforcement Modernisation and Other Measures) Bill 2026

Who it affects

• People who bring in, carry or have illegal tobacco: They face new crimes with jail terms, as well as fines.
• Shop owners and drivers caught with illegal tobacco: Anyone who carries or has the tobacco can be charged, even if someone else brought it into the country.
• Customs storage sites, warehouses and customs brokers: New licence rules make them responsible for stopping illegal tobacco moving through their business.
• Duty free shops and ship suppliers: Tobacco that may get a tax refund stays under border control until it is sold or sent overseas.
• People facing cases to take back money made from crime: Courts count more of what they gained from crime, and give less credit for costs.

Why it exists

Tobacco sold in Australia carries a big tax. Australia no longer grows or makes tobacco. So the tax is collected at the border, as customs duty, when tobacco comes in. Illegal tobacco is tobacco brought in without paying that tax, or without the right permit.

The Parliamentary Library works for all MPs and takes no side. It says spending on legal cigarettes and tobacco has almost halved since 2020. It says people seem to be moving to illegal tobacco more than they are quitting.

The government says crime groups now control the whole illegal tobacco chain. They buy it overseas and sell it in shops. It says current laws do not stop them.

Most old tobacco crimes needed proof that the person meant to cheat the tax and knew the tax was due. The government says that is very hard to prove, because gangs keep away from the border. So often the only thing police can prove is that the tobacco came in illegally.

In those cases the tobacco can be seized, and the person may have to pay a fine. The gangs treat fines as a cost of doing business. They pay them out of their big profits.

The Illicit Tobacco and E-Cigarette Commissioner is the official in charge of fighting illegal tobacco and vapes. The Commissioner's 2024-25 report called for tougher punishment. The law responds with eight changes.

Five of them change the Customs Act 1901, the main law on goods crossing the border. Three change the Proceeds of Crime Act 2002. That law lets the government take back money made from crime.

This law began as a bill, which is a draft law. It follows the Combatting Illicit Tobacco Act 2026, another law on illegal tobacco that Parliament passed only weeks earlier.

Parliament has two houses. The House of Representatives is where the government is formed. Its members are MPs, short for members of Parliament. The Senate is the second house, and its members are senators.

New crimes for illegal tobacco

Part 1 of the law adds six new crimes. Two are based on reasonable suspicion. You commit one if you bring in tobacco, or carry tobacco from overseas, or have it in your possession. It must also be reasonable to suspect that it came in illegally, or with the tax dodged.

A reasonable person is an ordinary sensible person looking at the facts. The test looks only at what the facts show. What the accused or anyone else thought does not matter.

The law lists facts that are enough for a reasonable person to suspect the tobacco came in illegally. No customs duty was paid. The goods are not in a cargo report, which lists goods arriving by ship or plane. There is no import form telling customs what is coming in. There is no import permit.

The goods are hidden to avoid being found. They are not in the legal plain packs. They are banned products. The person has no tax invoice or shipping paper showing how they got the goods. The person says they act for someone else but cannot name them in a way that lets them be found.

If one of those facts is there, the person charged only has to point to some proof that the suspicion is wrong. The prosecution, the lawyers who bring the case for the government, does not have to prove the suspicion. It must still prove the rest of the crime beyond reasonable doubt. That means no real doubt is left.

Four more crimes cover bringing in tobacco with no permit, or breaking the rules of a permit. They also cover carrying or having that tobacco, even if someone else brought it in.

Each of these six crimes can bring up to 5 years in jail, a fine of 6,000 penalty units, or both. A penalty unit is a set dollar amount used to work out fines. It is $364 at the time of writing, so 6,000 units is $2.184 million. The government says the fine is high because illegal tobacco makes such big profits.

Customs officers and police can arrest someone without a warrant, if they have good reason to believe that person did one of the new crimes. A warrant is a signed legal order.

Tougher penalties in serious cases

The law adds a more serious version of each new crime. It can bring up to 10 years in jail, a fine of 8,000 penalty units ($2.912 million at $364 a unit), or both.

A case becomes more serious if any of these is true. The tobacco weighs 100 kilograms or more. The customs duty owing on it is $200,000 or more. Three or more people worked together. The person organised or paid for others. False papers or lies were used. Goods held under customs control, such as in a border depot, were tampered with. A depot is a licensed place where goods wait to be cleared. An example of tampering is breaking a seal that customs put on goods.

A case is also more serious if the person did it again and again over a period, as a business-like routine. It also counts if someone misused a role they were trusted with. It counts if a licensed storage site, warehouse or broker broke their licence rules. So does a deal across borders, or misuse of a government computer system.

A jury is a group of ordinary people who decide if someone is guilty. Sometimes a jury is not sure about the extra serious fact. It can still find the person guilty of the basic crime. A person who has been found guilty or not guilty of the serious crime cannot be tried again for the same acts.

Proving that goods are tobacco

Big seizures can hold millions of cigarettes. The government says testing every one would be slow and cost a lot.

So the law says goods shaped like cigarettes count as tobacco. It also allows testing a sample. If some items are tested and the rest look the same, all of them count as tobacco.

The head of customs sets the testing method in a public rule, one that anyone can read. That person is the Comptroller-General of Customs, who is also the Australian Border Force Commissioner. The Australian Border Force is the agency that guards the border. Parliament can cancel the rule by voting it out.

The accused can fight this by pointing to proof that the goods are not tobacco.

Tobacco on the top smuggling list

Part 2 is a short fix. Some smuggled goods are put on a list called tier 1 goods, which bring the heaviest smuggling penalties. The government adds goods to the list in its detailed rules. Before, the wording left doubt about whether illegal tobacco could be put on the list.

The law makes clear that it can. Detailed rules are rules the government writes without a new vote in Parliament. Parliament can cancel them by voting them out.

Tobacco waiting for a tax refund

Some tobacco has its customs duty paid but can get the money back later. This happens when it is sold in duty free shops, which sell to travellers, or given to ships heading overseas as ship supplies. Customs control means officers can check goods and give orders about them.

Part 3 calls this refundable tobacco. It stays under customs control until one of three things happens. It is legally sold through duty free shops, or sent overseas, or the refund claim is withdrawn or turned down.

While under customs control, officers can check it and give orders to the people holding it. Those people must keep it safe. If they lose it or cannot say where it went, they have to pay the tax.

Faster seizures

Part 4 changes what happens when illegal tobacco is found. A seizure is when officers take goods. Officers could already take tobacco brought in with no permit, without a warrant. The law lets them do the same for tobacco that has a permit but breaks its rules. The government says otherwise gangs could get a permit and then ignore it.

Tobacco that is taken belongs to the government from the moment it is taken. The owner is the person who owned the tobacco when it was seized. That person cannot claim the tobacco back, but keeps other rights. The government's notes say the owner can still ask for information and challenge decisions. Money for goods wrongly destroyed may still be claimed in some cases.

Officers have new ways to tell people about a seizure. They can send an email, flag it in the online cargo system, or post it on the department's website. They can also send one notice a month to a storage site or warehouse, covering all seizures there.

New duties for storage sites and brokers

Storage sites and warehouses hold goods from overseas before they are cleared. Customs brokers handle paperwork for people bringing goods in. All need a licence from the Border Force.

Part 5 adds licence rules. Licence holders must not do anything that helps illegal tobacco come in. They must not break their licence or any federal law. They must also do all they fairly can to stop others doing this through their business.

Breaking a warehouse's licence rules was already a crime. It can bring a fine of up to 60 penalty units, which is $21,840 at $364 a unit. The new tobacco duties are now licence rules. Breaking them can be that crime. It can also make a tobacco crime more serious.

The government gives two examples. A site unpacks a container out of view of its cameras and misses hidden tobacco. That breaks the rule. Another site only stores sealed containers and has no reason to look inside. It does not break the rule just because one held tobacco.

Part 5 also renames an advice group. The National Customs Brokers Licensing Advisory Committee becomes the National Customs Licensing Advisory Committee. The head of customs can ask it to look at risky licence applications from storage sites and warehouses, as well as brokers. It only gives advice. The head of customs still makes the decisions.

Getting records to trace money

Part 6 changes the Proceeds of Crime Act. Its first section is about orders from a magistrate, a type of judge. These orders force someone, like a bank, to hand over records. The records help trace money made from crime.

Before, a magistrate could usually only order papers held in their own state or territory. Now a magistrate can order papers held anywhere in Australia, or reachable from Australia. The government says this is how records are now stored, online.

These orders can be made at any time, even after a court case has started. The records can be used as proof in court.

The penalty for destroying or tampering with papers under an order goes up. It was 6 months jail or 30 penalty units ($10,920). It is now 2 years jail or 120 penalty units ($43,680).

Paying back what crime earned

The second section is about court orders that make a person pay the government the value of what they gained from crime.

The law says courts must count the full amount gained, with nothing taken off for costs. Say someone uses inside information about a company to buy $750,000 of shares and sells them for $1.5 million. Shares are small parts of a company that people buy and sell. The government's notes say the amount to repay is based on the full $1.5 million. The $750,000 spent on the shares is not taken off. Bribes paid to win a deal, and the costs of a crooked contract, cannot be taken off either.

A court can only cut the order by money the person has really paid to make up for harm. Amounts still owed do not count. Fines can no longer be used to cut it. If that money is later paid back to the person, the order can go back up.

The law also makes clear which property the court looks at. It is property the person controlled when a court ordered it held, or when the case was filed. This stops people moving their things away later.

Counting wealth that is unexplained

The third section is about unexplained wealth orders. These let a court make a person pay any wealth they cannot show came from legal sources.

The government says the old wording could count the same money twice. Say you put $100,000 cash in the bank. Only the bank balance counts, not the cash as well.

Money that left no trace in other property still counts. Say you paid $2,000 in fees to buy a $1 million house. The $2,000 still counts.

Law since October 2026

Most of the law starts the day after it became law. Part 5, on licence rules, starts on a day the government picks. The firms it covers will know the date, and it can be no later than 12 months after the law began.

The bill was brought to the House of Representatives on 10 September 2026. It was first debated there on 17 September. A group of senators looked at it. It reported on 8 October 2026 and said the bill should pass.

The House debated it again on 12 and 13 October 2026. It passed the bill on 13 October 2026.

The bill went to the Senate on 14 October 2026. The Senate passed it on 15 October 2026. That day it had passed both houses.

On 26 October 2026 the Governor-General, the King's representative, signed it. This is called Royal Assent. The bill is now law, Act No. 101 of 2026.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

Open the full interactive page