Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Schedules 1, 2 and 4 to this bill amend the A New Tax System (Wine Equalisation Tax) Act 1999 to introduce a new wine producer rebate and address certain compliance and administrative issues arising from the legislation. These amendments:
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- enable wine producers to claim a wine producer rebate offsetting wine tax liability under a threshold wholesale value of domestic wine sales, and provide for circumstances in which certain producers may not be eligible;
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- repeal provisions that provide for producer rebate for certain retail sales and applications for own use;
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- include the value-adding costs involved in bottling and packaging bulk wine for purposes of retail sale in the tax base for assessing wine tax liability;
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- include the receipt of certain wine tax credits after export of wine as a ground for the preclusion of wine tax exemption upon re-entry of the wine that had not been altered or undergone a change in ownership; and
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- effect a technical amendment relating to a reference to the term 'price' in a provision.
Under Schedule 3 to this bill, provisions in the Income Tax Assessment Act 1997 which allow for accelerated depreciation for grapevine plantings are repealed.
Date of effect : The producer rebate and capital allowances for grapevine measures commence on and from 1 October 2004. The compliance measures and technical amendment are taken to have effect on the date this bill receives Royal Assent.
Proposal announced : The provision of a wine producer rebate and the removal of accelerated depreciation for grapevines were announced in the 2004-2005 Budget. The compliance measures were not previously announced.
Financial impact : The wine producer rebate will provide additional assistance of around $342 million to wine producers from 2004-2005 to 2007-2008. The extent of revenue protection is not quantifiable for the compliance and administrative improvement measures. The grapevine measure is estimated to yield a revenue of $2 million in 2004-2005, $6 million in 2005-2006, $11 million in 2006-2007 and $17 million in 2007-2008. The technical amendment has no financial impact.
Compliance cost impact : The wine producer rebate arrangements reduce compliance costs for producers. Minor costs will be incurred by parties that choose to calculate the notional wholesale selling price where bulk wine on which wine tax has been paid is then bottled and packaged. Alternative methods that do not incur these costs are available. The grapevine measure is expected to have a negligible impact on compliance costs. There are no additional costs associated with the wine export/re-entry measure or technical amendment.