News · Law reform
New Commonwealth illicit tobacco offences.
On 10 September 2026, the federal government introduced a bill to modernise the Customs Act and make illicit tobacco prosecutions easier. The changes would let authorities prove tobacco was illicit from circumstances such as a suspiciously low price or non-compliant packaging, and would strengthen proceeds of crime powers. Here is what that means for importers, distributors and retailers.
By Aaron Kernaghan · Published 10 September 2026
What the bill does.
The Assistant Minister for Customs introduced legislation to modernise the Customs Act 1901 (Cth) and strengthen the response to the illicit tobacco market. The bill creates separate offences for importing illicit tobacco and for possessing or moving it within Australia. The key change is to how illicit status is proved. Prosecutors would be able to point to circumstances that would lead a reasonable person to suspect the tobacco was illicit.
The government has framed this as a shift away from laws written for another era, when the concern was low-level attempts to defraud a bit of revenue, toward laws built for organised crime. It has said the main focus is serious criminals, while making clear that retail premises holding illicit tobacco will be easier to target, and that Commonwealth laws reach companies as well as individuals.
What is illicit tobacco?
Illicit tobacco is tobacco brought into Australia without paying customs duty, or tobacco that does not meet Australian rules, such as plain packaging, or banned products like menthol cigarettes. The federal excise on legal tobacco is high, which is what creates the black market. Dealing in illicit tobacco has long been a Commonwealth offence, but prosecutions have been difficult.
Why prosecutions were hard, and what changes.
Under the existing law, prosecutions are routinely frustrated because the Crown must prove the accused knew the tobacco was illegally imported and subject to customs duty. Proving that state of mind, especially against a shopkeeper at the end of a long supply chain, is hard. The bill responds by letting the prosecution rely on circumstances that point to illicit status: cigarettes sold for less than the excise and GST that would apply to a legal product, packaging that does not comply with plain-packaging rules, banned variants such as menthol, or the absence of any documentation showing where the tobacco came from.
For a defence, this reframing is significant. It moves the argument from what the accused knew toward what the circumstances showed. A person accused under the new offences will want to test whether those circumstances truly point to illicit status, and whether any innocent explanation is available. The precise wording of the fault elements will decide how much room remains, and that will be scrutinised as the bill is debated.
Proceeds of crime.
The bill also strengthens proceeds of crime laws, expanding the power to obtain documents and tightening the rules aimed at stopping criminals from shielding assets. The stated goal is to take the cash, cars, houses and other assets built from illegal tobacco sales. This mirrors a broader trend in enforcement: going after the money as hard as the conduct. Our note on money laundering and proceeds of crime under Division 400 explains how the Commonwealth proceeds regime works.
If you run a shop or a business.
Anyone in the retail or distribution chain should take the announcement seriously. Possession of illicit tobacco on business premises is being made easier to prosecute, and companies can be charged. If your premises are searched, or you are asked to account for stock, get advice before you answer questions. Our earlier note on illicit tobacco and vape offences sets out the enforcement setting these new offences sit within.
The excise fight behind the black market.
The illicit trade exists because legal tobacco is heavily taxed. The gap between the price of a legal packet and an illegal one is what funds the black market and draws organised crime into it. There is a live political argument about how to respond. The government has taken the position that stronger enforcement is the answer, which is what this bill delivers. The opposition and others have argued for cutting the excise instead, on the view that a smaller price gap would shrink the market. That debate is about policy, not a matter for a criminal court, but it explains why the enforcement powers are being sharpened now.
For a person or a business, the practical takeaway is simple. Enforcement is increasing, the proof is getting easier for the prosecution, and the assets are in the frame. Understanding where your stock comes from, and keeping proper records, is the first line of protection.
State and Commonwealth offences run together.
Illicit tobacco is policed at both levels. The Commonwealth controls importation and customs duty, which is what this bill modernises. The states and territories run their own tobacco licensing and retail offences, and NSW has its own enforcement operations targeting shopfronts. A single search of a store can produce both a Commonwealth customs charge and a state licensing charge. Anyone facing action needs advice that covers both, because a decision made on one can affect the other.
Frequently asked.
What is illicit tobacco?
Tobacco brought into Australia without paying customs duty, or that does not comply with Australian rules such as plain packaging, or banned products like menthol. Dealing in it is a Commonwealth offence largely built on the Customs Act 1901.
What does the new bill change?
It creates separate import and possession offences and lets prosecutors rely on circumstances that would lead a reasonable person to suspect tobacco is illicit, such as a below-excise price, non-compliant packaging or missing documentation.
Can a shopkeeper be prosecuted?
Yes. Retail premises holding illicit tobacco will be easier to target, and Commonwealth laws reach companies, so tobacconists, warehouses and distributors can be prosecuted. The stated main focus is serious organised crime.
Can the profits be seized?
The bill strengthens proceeds of crime laws, expanding powers to obtain documents and tightening rules aimed at stopping criminals shielding assets.
To speak to a criminal defence lawyer, call Aaron Kernaghan on 0421 717 019.
This article is written by Aaron Kernaghan, criminal defence lawyer at Brady & Associates Lawyers, as at 10 September 2026. It is commentary and reflects the personal opinion of the author only. It is not legal advice, it is not a substitute for advice on your own matter, and it does not purport to be accurate or complete. Any matter referred to may be before the court and any person charged is presumed innocent. For advice on a specific matter, contact Aaron Kernaghan on 0421 717 019 or contact the firm.
More criminal-law commentary by Aaron Kernaghan.