Remission scheme for alcohol manufacturers

Check whether you are eligible for the Remission scheme for manufacturers of alcoholic beverages.

Last updated 30 May 2023

The Remission scheme

From 1 July 2021 the Excise remission scheme for manufacturers of alcoholic beverages (Remission scheme) provides eligible alcohol manufacturers with a full (100%) automatic remission of excise duty, up to a maximum of $350,000 per financial year, on alcoholic beverages they manufacture and enter into the Australian domestic market for home consumption.

From 1 July 2021, you must use the current excise return form so the automatic remission can be applied. Transitional rules under the Remission scheme will impact your entitlement to a refund under the Refund scheme for goods entered for home consumption before 1 July 2021. Refer to the transitional period information below.

The Remission scheme replaces the Excise refund scheme for alcohol manufacturers (Refund scheme). For more information, refer to Excise guidelines for the alcohol industry chapter 7 – Remissions, Refunds, Drawbacks & Exemptions.

Media: Excise remission scheme for manufacturers of alcohol
https://tv.ato.gov.au/ato-tv/media?v=bi9or7odjwnbgdExternal Link (Duration: 09:55)

How the automatic remission works

For goods entered for home consumption on or after 1 July 2021, a 100% automatic remission applies. All eligible businesses can receive a maximum of $350,000 per financial year.

You continue reporting all the goods you have entered for home consumption for the period on your excise return. This applies whether you:

have a periodic settlement permission (PSP)
are on prepayment and applying for a delivery authority.

However, you must use the current Excise return form when you lodge to enable you to apply the remission.

You are no longer required to pay the excise duty in full and then use the excise refund form to claim a refund.

Note: You are required to keep records of how much automatic remission you have applied so that you do not exceed the $350,000 per financial year cap. Once you have reached the $350,000 cap in a financial year, you must pay the required excise duty on all subsequent alcoholic beverages entered for home consumption in that financial year.

Who is eligible

To be eligible for this automatic remission you must:

hold a manufacturer licence authorising you to manufacture alcoholic beverages at the premises specified in your licence
have manufactured an alcoholic beverage and entered it into the Australian domestic market
have fermented or distilled at least 70% of the alcohol content by volume of the alcoholic beverage
be legally and economically independent of any other entity that has received a remission under the scheme in the financial year (or, in certain circumstances, a refund).If you're not legally and economically independent of any other entity, only one manufacturer in your group is entitled to the remission (or refund) in the financial year.

Situations where an alcohol manufacturer will not be legally and economically independent include:

it's a subsidiary of another alcohol manufacturer
another alcohol manufacturer subsidises its operations
where one or two individuals or companies control or have majority shareholding in multiple excise licence holders.

For more details about the remission scheme and the eligibility criteria, see Chapter 7 of the Excise Guidelines for the Alcohol Industry.

For more information on the term 'legally and economically independent', see Excise Ruling ER 2023/1 – Excise: the meaning of 'legally and economically independent'.

Additional requirements for distilled beverages

For remissions for distilled alcoholic beverages, you must also satisfy the still ownership test by:

owning one or more stills that
- have a capacity of at least 5 litres
- you install ready to use at the beginning of the financial year
- you used to manufacture an alcoholic beverage during the financial year.

The above applies if the financial year is not the first or second financial year in which you are eligible for a remission under the Remission scheme.

A still that you install ready to use at the beginning of the financial year doesn't have to be the same still that you use to manufacture an alcoholic beverage during the financial year.

Still ownership test

The still ownership test must effectively apply for the entire financial year in which the goods are entered for home consumption. If the remission is applied part way through a financial year, the test applies between the start of the financial year and the day on which the goods were entered for home consumption. There must also be a reasonable expectation that the test will be satisfied for the rest of the financial year.

Becoming a manufacturer part way through the financial year

If you get your manufacturer licence part way through the financial year, you calculate the maximum remission by multiplying $350,000 by the number of days in the period then dividing the result by 365 days.

The period starts from the date you first get your manufacturer licence and ceases at the end of that financial year.

Exclusions

The scheme excludes:

excisable goods entered for home consumption on or before 30 June 2021
products to which wine equalisation tax applies
ready-to-drink (RTD) mixed spirits, where another manufacturer produces the spirit and you then blend that manufacturer's spirit with a non-alcoholic beverage to create an RTD product.

How the remission is applied in your excise return

You must use the current excise return for goods entered on or after 1 July 2021. At Label F in the Product details section, select 'Yes' to apply the alcohol manufacturer remission to the line entry for eligible product.

You are required to report all goods entered for home consumption during the period, whether or not the remission is applied.

What to do when you reach the $350,000 cap

Once you have reached the $350,000 cap in a financial year, you can no longer apply the automatic remission. This means, you must select 'No' in Label F in the Product details section of your excise return for all product reported for the rest of that financial year.

If you reach the $350,000 cap part-way through a reporting period, when you lodge your excise return for that period, you will need to use separate lines in the Product details section and at Label F, select:

'Yes' for eligible product lines up to the cap amount
'No' for the remaining product lines.

You will need to do separate lines, even if the product is the same tariff item.

You may not be able to apply exactly $350,000 of automatic remission. However, the total applied must be as close as possible to $350,000 for the year.

Start of example

Example: reaching the maximum $350,000 cap

Distillery Co have applied $325,000 automatic remission in their excise returns, up to October 2022. This means they only have $25,000 automatic remission they can apply in future returns before they reach the $350,000 cap for that financial year.

The excise duty payable on product included in their November 2022 excise return, before applying the remission, is $90,000.

Distillery Co need to use separate lines in the Product details section. To apply the remission, they complete the form as follows:

line 1 tariff sub-item 3.2 Excise amount $25,000 – Label F Apply alcohol remission to this line – select 'Yes'
line 2 tariff sub-item 3.2 Excise amount $65,000 – Label F Apply alcohol remission to this line – select 'No'
select 'No' at Label F Apply alcohol remission to this line, on all excise returns for the remainder of the financial year.

End of example

Refer to details on how to complete your form in Excise return and instructions.

Duty paid incorrectly on goods entered on or after 1 July 2021

If you incorrectly pay excise duty on goods entered for home consumption on or after 1 July 2021, where you were entitled to apply the remission but didn’t, you may apply for an excise refund.

Any amount of refund claimed in this situation will count towards your $350,000 cap for the financial year. See Excise refund or drawback.

Start of example

Example: mistakenly paying duty instead of applying the remission

Brewery Co (who has a periodic settlement permission) lodges their excise return for the September 2022 period and pays the full amount of excise duty on the goods entered for home consumption during that period. They then work out that they were entitled to apply the automatic remission to those goods.

As they have paid excise duty, they cannot apply the remission. Instead, they may complete and lodge the excise refund form for the amount of duty they paid on which they would have been entitled to a remission using the ERRO refund code.

The amount of the refund will count towards Brewery Co's $350,000 cap for the 2022–23 financial year.

End of example

Transitional period

Transitional rules apply for goods entered for home consumption:

before 1 June 2021
between 1 June 2021 and 30 June 2021.

For more information on the transitional rules, see the Excise Guidelines for the Alcohol Industry.

QC65935