Commodity Levies Act 1990

The Commodity Levies Act 1990 is a framework law. It allows a levy to be imposed on a commodity by Order in Council, with the levy paid to an industry organisation.

For most business owners, that means the Act is only the starting point. It does not create one universal levy rate or one standard payment process across all industries. Instead, it sets the legal rules for how a levy can be created, what a levy order must contain, how levy money can be used, and what compliance tools exist if levy obligations are not met.

If you are in a primary sector business, the practical question is usually this: is there a levy order for your commodity, and if so, what does that order require your business to do?

The answer may differ depending on where you sit in the supply chain. In one industry, the producer may pay directly. In another, a buyer, processor or agent may have to deduct the levy and pass it on. The Act is designed to support both models.

The Act uses a broad definition of commodity. It can cover agricultural, farmed, forestry, horticultural, mineral and wild products. It also says a commodity can belong to more than one class.

That matters because businesses sometimes assume commodity levies are only about traditional farmgate production. The Act is wider than that. It can apply to products produced, grown, raised, extracted, harvested or gathered.

The Act also recognises that levy systems do not always stop with the producer. A levy order may identify the people primarily responsible for paying the levy, but it can also require another person to pay it to the industry organisation first and then recover it from the primary payer.

In practice, that can bring agents, processors, buyers or other intermediaries into the compliance chain. A small business that never thought of itself as a levy payer may still have collection, deduction or reporting duties under a levy order.

The safest approach is not to rely on industry habit or verbal guidance. Read the levy order and identify exactly where your business sits in the chain.

A levy cannot be created just because an industry body wants one. The Act puts conditions around the process.

Before a Minister can recommend a levy order, the organisation that wants the levy must ask for it and provide a written plan showing how levy collected in the first full year would be spent.

A central part of the process is the support referendum. The Minister must be satisfied that the referendum was competently devised, clearly described the proposal, was properly publicised, and gave potential levy payers a reasonable opportunity to participate.

The Act also requires support thresholds to be met. More than half of participants must support the levy. Depending on the voting basis used, there are also threshold tests linked to production, value, land area, or the number, quantity or capacity of a specified thing used in production.

The Minister must also consider consultation beyond the referendum itself. That includes people likely to be affected by payment or collection of the levy, opponents of the levy, and other organisations representing the interests of the people who would mainly pay it.

The Minister must be satisfied that the proposed spending is closely related to levy payers’ interests and that the benefits outweigh the disadvantages of imposing, collecting and paying the levy.

For business owners, the practical point is that levy systems are meant to be industry-backed and accountable. If a levy is proposed or renewed in your sector, the process is not just administrative. It is meant to test support and explain how the money will be used.

The levy order is the document your business needs to read closely. The Act says every levy order must specify core matters.

These include the industry organisation, the commodity, the people primarily responsible for paying the levy, the basis for calculating it, any exemptions, and who must actually pay the levy to the organisation.

Where someone other than the primary payer must pay first and recover the amount later, the order must also deal with that arrangement and the recovery mechanism.

The order must also cover practical operating details such as payment periods, whether there is one rate or different rates, how rates are notified, how often the levy is paid, and the due and latest payment dates.

It may also deal with returns, maximum and minimum levy amounts, extensions of time, and additional or increased levy for late or unpaid amounts.

That means two businesses can both be affected by this Act but face very different day-to-day obligations because their levy orders are different. One levy may be based on production volume. Another may be based on value. Another may use land area or the number, quantity or capacity of a specified thing used in production.

For business planning, do not stop at the Act. The levy order is where the operational detail usually sits. If your finance team, accounts staff or operations manager only read the Act and not the order, they may miss the actual payment method or reporting steps that apply to your commodity.

The Act places clear limits on how levy money can be handled and spent. If an industry organisation receives levy money, it must open one or more bank accounts for levy purposes and use those accounts only for depositing levy money and making payments out of levy.

Only people expressly authorised by the organisation may operate those accounts, and money cannot be paid out except for a purpose authorised by the order or the Act.

The main restriction is that levy money cannot be spent on commercial or trading activity. That is an important boundary. Levy money is not a general business fund for the organisation.

At the same time, the Act allows levy money to be used for a range of industry purposes. These include research, product development, market development, generic promotion, animal or plant health, quality assurance, education, information, training and day-to-day administration of the organisation’s activities, so long as that administration is not administration of commercial or trading activity.

The Act also allows some limited exceptions. For example, levy money may be used to buy limited quantities of the commodity or products made from it for promotion, research, education, product development and market development, and those quantities may be resold. Levy money may also be invested pending expenditure.

In some cases, the Minister may give written approval for spending that would otherwise be prohibited, but only if the statutory tests are met.

For levy payers, this matters because the Act is built around accountability. The organisation receiving the levy is expected to use the money for purposes connected to the interests of the people who mainly fund it.

The Act expects levy systems to be auditable. Every levy order must provide for specified accounts and records to be kept by industry organisations, levy collectors, and people who are or may be liable to pay the levy. The order must also specify how long those records must be retained.

That is important for small businesses because ordinary bookkeeping may not be enough. If the levy order requires records that show production, quantities, values, deductions, remittances or other levy-specific information, those records need to be kept in a way that matches the levy calculation method.

While a levy order is in force, the Minister may appoint qualified auditors at the request of the industry organisation to audit collectors, levy payers or both. An auditor may also be appointed where a mediator is dealing with a dispute.

The purpose of these audits is to check whether levy is being paid, collected and passed on correctly, and whether records are being kept and properly maintained.

An auditor who is properly authorised in writing may require production of records or accounts required under the Act or levy order, within a reasonable period, and may take copies or extracts.

The Act also allows performance assessments of industry organisations. Those assessments can look at whether the organisation is complying with the levy order and the Act, whether it is using levy money efficiently and economically, and whether the spending benefits the people primarily responsible for paying the levy.

The Act also includes search powers under warrant where there are reasonable grounds to believe evidence of an offence is in a place.

In practical terms, levy compliance should be built into your systems early rather than reconstructed later. If your business collects levy on behalf of others, regular reconciliations can be just as important as the final payment itself.

The Act creates offences for a range of levy-related failures. These include avoiding levy, failing to collect levy, failing to pass on collected levy, failing to issue invoices as required, failing to keep or properly maintain records, failing to submit required statements or returns on time, knowingly submitting false, incomplete or misleading statements or returns in a material particular, and failing without reasonable excuse to comply with an auditor’s lawful requirement for records.

The Act also prohibits obstruction of a person executing a search warrant. A person convicted of an offence under the Act is liable to a fine not exceeding $10,000.

The Act also builds in a dispute pathway. Every levy order must provide for mediators to resolve disputes about whether a person is required to pay the levy and the amount payable. The order must also provide a right of appeal to a District Court Judge against mediator decisions.

For business owners, the practical lesson is that levy issues should be treated as an operational compliance task, not an informal industry matter. If your business model changes, for example from producer-only to importer, processor or collector, revisit the levy position.

If you are unsure whether you are liable or whether the amount is right, check the levy order and use the dispute process rather than letting the issue drift. Delay can make a simple classification or calculation issue harder to fix later, especially if records are incomplete.

The Act also gives industry organisations recovery options. Where a person who is not primarily responsible for the levy must deduct it from money owed to the primary payer and pass it on, the deducted amount, or the amount required to be deducted if still in that person’s possession, is treated as money held in trust for the organisation until paid over.

If the required deduction is not made before payment to the primary payer, the Act also allows recovery from the person to whom the other amount was paid. That is a strong reason to build levy deductions into payment systems rather than handling them manually at the end of the month.