Source: New places to play in Gungahlin
The illicit tobacco trade
Engaging in the illicit tobacco trade is a serious offence. It significantly deprives the Australian community of vital funding which could be used to fund essential community services such as health, education, transport and infrastructure.
Tobacco is illicit when it is grown, manufactured and/or produced in Australia or imported into the domestic market without customs duty being paid.
Illicit tobacco products may include:
- cigarettes
- cigars
- loose tobacco (also known as ‘chop-chop’)
- tobacco leaf and plant matter.
The illicit tobacco trade includes but is not limited to the unlicensed:
- production of tobacco plant or leaf
- manufacture of tobacco products
- tobacco sold without payment of taxes.
Tackling illicit tobacco
We use a range of investigative and legislative approaches to disrupt illicit tobacco activity. These include:
- gathering intelligence
- conducting investigations
- conducting audits and using proceeds of crime action to target wealth created by those participating in the growing, manufacture, distribution or sale of illicit tobacco
- working with federal and state government and law enforcement agencies as part of investigations and intelligence sharing (see Illicit Tobacco Taskforce)
- identifying, seizing and destroying identified crops
- collecting evidence as part of prosecution activity
- using the Taxation Administration Act 1953, Excise Act 1901 and the Criminal Code Act 1995 to prosecute offenders.
Every crop we seize and destroy, burns another hole in the illicit tobacco trade. We continue to disrupt the illicit tobacco trade by prosecuting those who are found to be domestically growing and manufacturing illicit tobacco.
See examples in our Illicit tobacco case studies.
Illicit tobacco enforcement – results as at 31 March 2025
|
Financial year
|
Number of seizures
|
Amount seized and destroyed
(kilograms)
|
Cigarettes (sticks)
|
Estimated excise duty
($million)
|
Number of convictions
|
|
2018–19
|
8
|
41,400
|
Nil
|
42
|
4
|
|
2019–20
|
22
|
130,656
|
11,480
|
171
|
4
|
|
2020–21
|
23
|
109,186
|
5,496,379
|
178
|
1
|
|
2021–22
|
21
|
110,349
|
1,661,520
|
176
|
1
|
|
2022–23
|
16
|
66,711
|
1,207,516
|
111
|
6
|
|
2023–24
|
81
|
16,687
|
13,382,445
|
45
|
11
|
|
2024–25
|
7
|
20,959
|
6,089,733
|
52
|
3
|
|
Total
|
178
|
495,948
|
27,849,073
|
775
|
30
|
Illicit Tobacco Taskforce
On 1 July 2018, the Illicit Tobacco Taskforce (ITTF) was established as part of new reforms. The ITTF enhances the ability of the ATO and our partner agencies to protect Commonwealth revenue, by proactively detecting, disrupting and dismantling serious organised crime syndicates that deal in illicit tobacco.
The taskforce draws on the expertise and advanced capabilities of the:
- ATO
- Australian Border Force (lead)
- Department of Home Affairs
- Australian Criminal Intelligence Commission
- Australian Transaction Reports and Analysis Centre
- Commonwealth Director of Public Prosecutions and law enforcement partners.
Using the consolidated power of these government agencies, the taskforce fights back against organised international and local criminals that operate multimillion dollar crime syndicates.
Domestically grown tobacco
The ATO is responsible for domestically grown or manufactured tobacco. It’s illegal to grow tobacco in Australia without the appropriate excise licence. Currently, no one is licensed to grow or manufacture tobacco seed, plant or leaf for commercial sale or personal use.
We receive referrals from the ITTF, state law enforcement partners and tip-offs from industry and the community. We use the referrals to produce actionable intelligence to bring both civil and criminal consequences against those who engage in illicit tobacco.
However, organised crime syndicates continue to set up and run these growing operations, sometimes by targeting unsuspecting landowners, attempting to lease land to grow illicit tobacco. These operations are not run by genuine farmers or landowners, but by criminals living and operating in local communities.
Organised criminals who deal in illicit tobacco rob the Australian community of valuable revenue, instead:
- using their profits to fund their lavish lifestyles
- allowing them to continue to engage in criminal behaviour well beyond the sale of illegal tobacco.
Signs that someone is growing tobacco
Some of the signs that land is being used to grow, manufacture or produce illicit tobacco are:
- intense labour production between November and May
- people approaching real estate agents, landowners or farmers to lease land within or outside of the state they live in
- suspicious responses to online and print ads where land is being advertised for sale or lease
- unusual earthworks along creeks and rivers on private and public land
- an unusual source of loose tobacco
- unexplained and potentially unlawful use of water resources
- a strong tobacco odour
- large, leafy plants that, depending on the size, may resemble kale, cabbage or corn and may have a pink flower growing on top
- other suspicious activity.
‘Under the counter’ tobacco
Organised crime syndicates also target tobacco retailers across Australia to buy and sell illegally grown tobacco, also known as ‘under the counter’ or ‘black market’ tobacco.
Buying and selling illicit tobacco is a serious tax crime. Retailers choosing to become involved in the illicit tobacco trade not only contribute to the loss of funding for essential community services, but they also gain an unfair advantage over honest businesses who are doing the right thing. There are penalties for selling illicit tobacco.
Removing illicit tobacco from our streets creates a level playing field for all retailers.
Signs that someone is selling illicit tobacco
Some of the signs that tobacco retailers are selling ‘under the counter’ tobacco are:
- cigarettes, cigars or loose-leaf tobacco (sometimes referred to as ‘chop-chop’ or ‘roll your own’) are missing health warning labels
- strong tobacco odour despite the shop containing strongly scented items like candles and incense
- customers asking for ‘cheap cigarettes’ or ‘under the counter cigarettes’
- customers leaving a retailer with small plastic bags, often black in colour.
Penalties
The government passed the Treasury Laws Amendment (Illicit Tobacco Offences) BillExternal Link which outlines a tobacco offence regime. The tax laws increased the set penalties to a level that provides greater deterrence to illegal activity. The penalty amount is calculated in multiples of a penalty unit. If the infringement occurred on or after 7 November 2024, the penalty unit amount is $330.
Penalties by activity for illicit tobacco
|
Activity
|
Penalty
|
|
Possessing more than 2 and less than 5 kilograms
|
Civil penalty – a fine of up to $33,300
|
|
Possessing 5 kilograms or more
|
Criminal penalty – a criminal conviction with a prison sentence of up to 5 years or a fine between $66,000 and $330,000, or both
|
|
Selling illicit tobacco products
|
Criminal penalty – a criminal conviction with a prison sentence of up to 5 years or a fine between $66,000 and $330,000, or both
|
|
Buying illicit tobacco products
|
Criminal penalty – a criminal conviction with a prison sentence of up to 5 years or a fine between $66,000 and $330,000, or both
|
|
Manufacturing or producing illicit tobacco
|
Criminal penalty – a criminal conviction with a prison sentence of up to 10 years or a fine between $165,000 and $495,000, or both
|
Tobacco tax gap
The tobacco tax gap is the difference between the estimated value of excise or customs duty raised from tobacco according to the law (‘tobacco duty’) and the value actually raised for a financial year. The tobacco tax gap estimate includes illicit tobacco importation and ‘chop-chop’.
For 2022–23, we estimate the net tobacco tax gap to be 14.3%. This equates to approximately $2.7 billion in lost excise revenue, meaning that $2.7 billion was channelled into organised criminal activities, instead of funding essential community services.
How to report it
If you suspect that illicit tobacco is being grown, manufactured or sold in your community you can report it anonymously to us by:
Keep up to date
Learn more about what illicit tobacco is and how we are fighting back. Discover and share our content.
Media releases