Navigating Australia’s Illegal Logging law changes

Australia’s Illegal Logging laws seek to combat illegal logging and promote the trade of legally harvested timber products. These laws impact on businesses that import prescribed wood, pulp or paper products into Australia, or process Australian grown raw logs.

Broadly, where a business wishes to import ‘regulated timber products’ (as prescribed by the law and determined based on tariff classification) into Australia or process Australian grown raw logs, Australia’s illegal logging laws require that a due diligence process is performed, including gathering the prescribed information, undertaking a risk assessment and implementing risk mitigation measures (where required). Following this due diligence, the regulated timber products can only be imported into Australia or the Australian grown raw logs processed where the business can demonstrate that there is a low risk of the products/raw logs being illegally logged. 

In 2021-22, the Department of Agriculture, Fisheries and Forestry (DAFF) undertook a sunsetting review of Australia’s illegal logging regulations. This has culminated in changes to the Illegal Logging Prohibition Act 2012 (the Act) through the introduction of the Illegal Logging Prohibition Amendment (Strengthening Measures to Prevent Illegal Timber Trade) Act 2024. New Illegal Logging Prohibition Rules (Rules) were also developed to replace the prior Illegal Logging Prohibition Regulation 2012 (the Regulation). 

Both the changes to the Act and the introduction of the Rules came into effect on 3 March 2025.

What has changed under the reforms? 

The key changes for businesses under the new laws include:  

• New due diligence pathways: The risk assessment methods under the prior Regulation is replaced by new pathways under the Rules which aim to establish a documented due diligence system based on the certification status of the imported product/raw log. Namely: 
  • A simplified due diligence pathway exists for certified products/raw logs. This pathway is focused on the verification of the certification, followed by a risk assessment. In undertaking the risk assessment, businesses must consider factors such as the extent of illegal logging in entities involved in the supply chain and any other information the business knows that may indicate whether the products/raw logs include illegal logged timber (amongst other things), and 
  • A full risk assessment approach for non-certified products. Under this pathway, in undertaking the risk assessment, businesses must consider factors such as country or state specific guidelines, extent of illegal logging in entities involved in the supply chain, the species/genus of the tree or the country (for imported products) where the timber was harvested and any other information the business knows that may indicate whether the products includes illegal logged timber (amongst other things). 
• Repeat due diligence exemption: Where identical products are imported via the same supply chain or a raw log is processed from the same supplier, a risk assessment or risk mitigation process is not required where it has been performed (together with the full due diligence process) on the relevant products/raw logs in the last 12 months.
• Exemptions for processors: An exemption from the due diligence requirements is provided to processors where the business is also the harvester of the raw log. 
• Changes to notice requirements: Businesses will need to provide notice of any regulated timber products to be unloaded into Australia or raw logs to be processed, which must be provided through a new IT system. It is important to note, in respect of imports, the previous method of providing notice via the Community Protection Question (CPQ) (at the time of making the import declaration) will no longer be available. DAFF has advised that the new IT system is still under development and therefore the requirement to provide notice will only come into effect at a later date when the IT system is available. 

The new laws also provide DAFF with increased monitoring and enforcement powers, including:  

• Increased monitoring powers: DAFF has been provided with additional monitoring powers under the new Rules, enabling DAFF to take, test and analyse samples of any products on premises and use timber identification technologies to verify specifies and origin claims.
• Flexible enforcement options: The amendments to the Act provide DAFF with the ability to address non compliance in new ways, including issuing injunctions and enforceable undertakings. The amendments also introduce penalties for certain offences, including failing to comply with due diligence requirements or failing to provide notice to DAFF in relation to the unloading of regulated timber product. Non compliance may be punishable as strict liability offences attracting a penalty of up to $19,800 or fault-based offences attracting up to five years imprisonment or a penalty of up to $165,000 or both in some circumstances. Alternatively, civil penalties of up to $33,000 may also apply.
• Ability to publish details of non compliance: DAFF may publish information regarding criminal convictions, civil penalty orders and enforceable undertaking orders on its website, including the identity of the business or other details of the contravention or order. Anonymised results from timber testing undertaken by DAFF may also be published. 

What have we seen in the lead up to the changes?

In preparing for the changes, DAFF conducted a trial of scientific timber testing techniques using higher risk regulated timber products that it purchased from the Australian market in 2024. Samples of the products were sent to third-party laboratories for testing against existing reference databases to determine species and/or origin. Additionally, portable timber imaging equipment was used to trial the accuracy of screening processes outside laboratory settings. 

The results of the trial indicated that approximately 25% of products tested were inconsistent with their declared species and/or origin. In particular: 

• across a number of retailers, there were several instances where undeclared veneers and solid timber products of potential, or likely, Russian, or Eastern origins were found
• there was a significant amount of undeclared content in paper products 
• the origin of some products declared as Burmese teak was uncertain, and 
• there was misleading information from USA and Europe originating oak. 

Although the above misrepresentations do not, in themselves, indicate that the products were illegally logged, the findings emphasised the importance of undertaking proper due diligence and risk assessment to mitigate the risk of importing or processing illegally logged timber. DAFF indicated that it would use the findings to guide their future approach. 

Businesses have also seen a recent increase in DAFF audit activity under the previous laws. In our experience, DAFF has been strict in interpreting the illegal logging requirements as part of these audits, focussing on verifying that a robust and comprehensive documented due diligence system is in place, the relevant due diligence process has been undertaken for each transaction and records have been kept. 

What should businesses be doing?

Given the increased monitoring and enforcement powers that DAFF has under the new laws, it is important for businesses to review the changes and reflect them into their systems and processes. Critically, businesses should ensure: 

• a robust, clearly defined and documented due diligence system is in place
• processes, systems, controls and governance structures are in place to support the above due diligence system
• written records are held for a period of five years in respect of information gathered, risk assessments undertaken, risk mitigation measures imposed and the final decisions made 
• relevant stakeholders are aware of the changes and training is provided where relevant, and 
• systems and processes are developed to allow for a notification to be made to DAFF through the new IT system (once the requirement is implemented). 

At PwC, we leverage our extensive expertise and experience in the customs and trade field to assist businesses in navigating the complexities of the evolving trade environment. Our dedicated team of trade professionals is adept at providing strategic insights and customised solutions to help companies assess and solve their important problems.