Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 2 - Wine
What does the wine tax apply to?
2.1 The wine tax will be applied to dealings in wine. Wine includes any fruit or vegetable wine. [Subsection 31-1(1)] Grape wine is defined in section 31-5 .
2.2 The wine tax also applies to dealings in cider, perry, mead and sake in the same way that it applies to wine. [Section 27-1]
2.3 The concept of wine is not exhaustively defined in the A New Tax System (Wine Equalisation Tax) Bill 1999 (WET Bill). An essential character test will be used to determine whether a beverage is wine or cider etc for the purposes of the provisions.
2.4 The essential character tests have been established by the Courts in cases such as
Thomson Australia Holdings Pty Ltd v Federal Commissioner of Taxation
88 ATC 4916
and
Deputy Federal Commissioner of Taxation v Rotary Offset Press Pty Ltd
71 ATC 4170
; (1971)
45 ALJR 518
.
Davies J. said in Thomson Australia Holdings at 4917:
the task of the court is to determine the essential character of the goods, what essentially the goods are, not some characteristic that the goods might have. Essential character derives from the basic nature of the goods, from what they are
2.5 Designer drinks will not meet the essential character test for wine and will not be taxed under the wine tax.
2.6 Certain beverages are specifically excluded from the concept of wine. These are:
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- beverages that do not contain more than 1.15% by volume of ethyl alcohol;
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- beer [defined at subsection 31-1(4)] ;
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- spirits, liquers or spirituous liquors; or
- •
- beverages containing beer, spirits, liquer or spirituous liquors. [Subsection 31-1(2)]