For taxable retail sales and own use of wine you use a notional wholesale selling price to calculate the amount of WET to pay.
There are two ways to calculate the notional wholesale price:
For grape wine you can use either method. For wine other than grape wine you must use the half retail price method.
Half retail price method
To calculate the notional wholesale selling price on retail sales or own use of wine using this method:
- work out 50% of the retail value
- for retail sales this is 50% of the sale price, including WET and GST
- for own use of wine, this is 50% of what the price, including WET and GST, would have been if you sold the wine by retail
- multiply that amount by 29% to work out the WET payable.
Example – half retail price method
Happy Valley Wines makes a retail sale of one dozen bottles of grape wine at the cellar door for $140, including WET and GST. A bottle of the same wine is used for tastings at the cellar door.
Value of a dozen bottles |
$140.00 × 50% |
= $70.00 |
WET payable per dozen |
$70.00 × 29% |
= $20.30 |
Taxable value of one bottle of this wine |
$70.00 ÷ 12 |
= $ 5.83 |
WET payable on the bottle used for tasting |
$5.83 × 29% |
= $1.69 |
End of example
Average wholesale price method
You can only use this method for grape wine and only if, in the relevant tax period, your wholesale sales account for at least 10% by value of all your sales of grape wine that is:
- the same vintage as the grape wine to which the retail sale or own use relates
- produced from the same varieties or blends of grape varieties as the grape wine to which the retail sale or own use relates.
To work out the average wholesale price, you use the weighted average of the prices of the wholesale sales (including exports) of wine that fall into this category for each tax period. By using the weighted average you take into account the relative proportion of each type of wine you sell, and also any discounts, incentives or similar that may reduce the wine’s selling price.
Example – average wholesale price method
Good Wines Winery produces a variety of wine which they sell by wholesale and directly to customers at the cellar door.
In the first week of September, they sell a dozen bottles of their 2014 Verdelho to a cellar door customer for $190 (inclusive of WET and GST).
During the rest of September, they sell additional bottles of the 2014 Verdelho, some to distributors.
In preparation for their September BAS, they work out that more than 10% of their sales of the 2014 Verdelho are wholesale sales to distributors.
Good Wines Winery chooses to use the average wholesale price method to calculate the taxable value and the WET payable for their retail sales of this wine in September.
The break up for the different wholesale prices for their 2014 Verdelho sales is:
- 70% at $80 per dozen (excluding WET and GST)
- 30% at $90 per dozen (excluding WET and GST).
To calculate the WET payable on a dozen of the 2014 Verdelho sold at the cellar door during the tax period:
- Step 1 Work out the weighted average price of the wholesale sales of 2014 Verdelho: (70% × $80) + (30% × $90) = $56 + $27 = $83
- Step 2 Multiply the weighted average price by the WET percentage (29%):
$83 × 29% = $24.07
The amount of WET payable for this cellar door sale of a dozen 2014 Verdelho is $24.07.
GST is unaffected by the difference between retail and wholesale sales. GST is calculated on the retail price of the dozen bottles of 2014 Verdelho, so GST = $190 ÷ 11 = $17.27.
End of exampleSee also
- Non-arm's length sales
- When you have to pay WET – Retail sales
- When you have to pay WET – Wine for own use