Work out if excise duty or wine equalisation tax applies
Wine fortification is the process of adding spirit to wine or grape must. You can add the spirit during or after fermentation.
To work out if excise duty or wine equalisation tax (WET) applies to a fortified alcohol product, we consider the:
- type of product that's fortified
- type of spirit used to fortify it
- final alcoholic strength of the end product.
Beverages with an alcohol content of 1.15% or less are not subject to either WET or excise duty.
You must record and keep details of all fortifying spirits you have received, stored and used. You must keep these records for at least 5 years and make them available to us if requested. For more information, see Records for wine fortification.
Excise treatment of fortified wine
The following table provides an indication of whether a fortified product is subject to wine equalisation tax (WET) or excise duty. However, we encourage you to contact us if you have questions about your specific situation.
Product | Alcoholic strength less than 8% | Alcoholic strength | Alcoholic strength more than 22% |
|---|---|---|---|
Grape wine fortified with grape spirit and / or brandy | WET | WET | Excise duty |
Grape wine products fortified with grape spirit and containing at least 70% grape wine | Excise duty | WET | Excise duty |
Fruit or vegetable wine fortified with grape spirit or neutral spirit | Excise duty | WET (The fruit or vegetable wine must be at least 15% strength after the fortification) | Excise duty |
Fruit or vegetable wine fortified with alcohol from any other source (see note) | Excise duty | Excise duty | Excise duty |
Mead fortified with grape spirit or neutral spirit | Excise duty | WET (the mead fortified with grape spirit or neutral spirit must contain between 15% strength and 22% strength) | Excise duty |
Cider and perry fortified with alcohol from any other source (see note) | Excise duty | Excise duty | Excise duty |
Sake fortified with any spirit | Excise duty | Excise duty | Excise duty |
Note: ‘Alcohol from any other source’ means alcohol from any original source other than the fruit or vegetables (for fruit or vegetable wine) or apples or pears (for cider or perry).
For more information, see:
- WETR 2009/1 Wine equalisation tax: the operation of the wine equalisation tax system
- WETR 2009/2 Wine equalisation tax: operation of the producer rebate for other than New Zealand participants.
Mixing alcoholic beverages to produce a new product
If you mix 2 or more alcoholic beverages or mix alcoholic beverages with other substances to produce a new alcoholic beverage, the tax treatment will vary. This depends on both the ingredients and the alcoholic strength of the final product.
Generally, if you mix alcoholic beverages with other substances, the final beverage is subject to excise duty and requires an excise manufacturer licence.
However if you mix an excisable alcohol product (including excisable alcoholic beverages) or other substance with wine that wine equalisation tax applies to, you should contact us for help to find out the correct tax treatment.
For more information see, When preparing mixed alcohol beverages isn't manufacture.
When you need a manufacturer licence
If the fortified product you intend to make is subject to excise duty, you must hold an excise manufacturer licence before you start manufacturing. This licence allows you to manufacture and store excisable goods (in this case, the fortified product).
Lodgment and payment obligations
If you are an excise manufacturer and you have excise lodgment or payment obligations, you will be required to lodge an excise return.
Concessional spirits used in wine fortification
You must apply for a permit where you intend to receive concessional spirits if you want to use spirits to fortify Australian wine or Australian grape must. A permit allows you to use the spirit for approved commercial purposes (in this case, fortification of Australian wine or Australian grape must).
Concessional spirits are free of excise duty. You will need a permit whether you produce the spirits yourself or get them from a licensed supplier.