Administrative penalties

When does this change start?

From 1 October 2018, administrative penalties will apply to all exporters, importers, licensees and agents who make errors or omissions on import, export or excise entries and do not voluntarily report it to Customs.

Who does this change affect?

Importers and their agents, exporters and their agents, excise manufacturers.

Why was this change made?

Previously administrative penalties only applied to import, excise and export drawback entries. It now applies to all export entries as well. It encourages all people to take reasonable care in completing their Customs entries and to voluntarily let Customs know when errors or omissions are made.

What if I made an honest mistake?

Let Customs know. Penalty amounts are capped and dependent upon the level of culpability - $20,000 for errors or omissions due to lack of reasonable care, $35,000 for cases of gross carelessness, and $50,000 for an error make knowingly.

Export entries sometimes need to be amended due to changes that take place later during the exporting process – for example, sales on consignment or situations where the freight invoice isn’t received until after the vessel sails. Would these amendments attract an administrative penalty?

Generally speaking, you won’t be liable for an administrative penalty if you voluntarily disclose the error or omission to us before we notify you that we are taking compliance action, and if you ensure the error or omission is fixed.

Specifically, you will not be liable for an administrative penalty if:

• you voluntarily disclose the error or omission to Customs before any compliance actions are notified 
• Customs is satisfied that the view that you formed of the relevant facts that gave rise in the error or omission, was reasonable in the circumstances
• Customs is satisfied that you acted in good faith on information provided by the importer, exporter or supplier of the goods, and reliance on the accuracy or completeness of that information was reasonable in the circumstances
• a charging document for an offence against the Act has been filed for the error or omission
• the date on which the error or omission was first identified is more than four years after the date of lodgement of the entry 
• you can show that you relied on a Customs ruling in relation to the error. This exemption applies only to the matter on which the ruling was given and only during the life of the ruling.

Administrative penalties apply when entries are considered to be materially incorrect, which means there are errors or omissions (that you don’t voluntarily disclose before any action is taken by Customs) for any of the following: (found in section 284 of the 2018 Act)

• the exporter’s identity
• the identity of the person making the entry
• the identification of the exporting craft or its voyage number
• the bill of lading, air waybill, booking reference, or container identification details
• the process indicator
• any permit number or code
• the Tariff item in which the goods are classified under the Tariff Act 1988
• the statistical quantity of the goods
• the final country of destination to which the goods are being exported
• the date of export
• the currency code for the currency in which the goods are traded
• the value of the goods expressed in New Zealand currency
• the value of the goods expressed in the currency in which they are traded
• the amount of any drawback claimed, if the entry includes a claim for drawback

You are able to replace or update an export entry without any additional fee.

Under what circumstances would the maximum penalty apply in the case of ‘materially incorrect’?

This is defined in section 287 of the 2018 Act. The maximum penalty could be applied if the error or omission results in:

• duty not being paid or declared and we are satisfied the error or omission was made knowingly
• excess drawback being paid or claimed and we are satisfied the error or omission was made knowingly.

Can I get an administrative penalty and an infringement notice for the same offence?

No. The penalty will be the most appropriate penalty for the offence committed. Two types of penalties will not be given for the same offence.

If the error or omission has not caused duty to not be paid/declared, or has caused an excess drawback to be claimed/to be paid, you will be liable for an administrative penalty of $200.00.

All other errors or omissions will be dealt with by the appropriate sanctions for the facts of the case. These sanctions may include an administrative penalty or infringement notice, not both.

We have produced some guidelines that show what factors Customs officers need to take into account when issuing either an infringement notice or an administrative penalty. We will publish these guidelines on 1 October 2018 so the process is transparent.

View the video for more info: