Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 8 - Quoting Grounds
Overview
8.1 This Chapter describes the general grounds on which an entity may quote an Australian Business Number (ABN) in respect of an assessable dealing. The grounds for quoting are dealt with in Part 3 of the A New Tax System (Wine Equalisation Tax) Bill 1999 (WET Bill).
Grounds for quoting an ABN
8.2 There will be 4 general grounds for quoting an ABN. The grounds will apply if the quoter intends to:
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- Ground 1: Sell the wine by wholesale or indirect marketing sale.
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- Ground 2: Sell the wine by any kind of sale, and the quoter is mainly a wholesaler.
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- Ground 3: Use the wine as a material in manufacture or other treatment or processing.
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- Ground 4: Make a supply of wine that will be goods and services tax (GST)-free.
[Section 13-5]
8.3 The quoter intends to sell the wine by wholesale or indirect marketing sale. [Paragraph 13-5(1)(a)]
8.4 This ground will apply to any entity that wishes to acquire wine for wholesale sale or indirect marketing sale, regardless of whether they sell wine mainly by wholesale or retail. As the wholesale sale will be an assessable dealing the purpose of the ground is to defer wine tax to that point.
8.5 This ground will apply only to wine that is definitely intended for wholesale or indirect marketing sale. The ground will not apply to allow an entity to quote in respect of a mixed stock of wine where some are for wholesale sale and others are not (and they cannot be separately identified).
8.6 The quoter intends to sell the wine by wholesale or retail, and the quoter is mainly a wholesaler. [Paragraph 13-5(1)(b)]
8.7 An entity will be mainly a wholesaler if they make wholesale sale or indirect marketing sales of wine (or both) and those sales account for more than 50% in value of all the entitys sales of wine. The entity will have the option of determining whether this test is met over the 12 months before the time of the quotation, or is reasonably likely to be met over the next 12 months. The value of the wine will be the amount for which it is sold. [Subsection 13-5(2)]
8.8 The quoter intends to use the wine as a material in manufacture or other treatment or processing, whether or not it relates to or results in other wine. [Paragraph 13-5(1)(c)]
8.9 An example of a situation covered by this ground would be an entity that uses wine to make wine vinegar. The wine could be purchased by the entity free of wine tax. The wine vinegar would not be subject to wine tax as it falls outside the definition of wine in section 31-1.
8.10 The quoter intends to make a supply of wine that will be GST-free. [Paragraph 13-5(1)(d)]
8.11 This ground will allow an entity to quote for wine, if the wine is intended for supply in circumstances that will be GST-free (eg. wine to be exported).
8.12 An entity may also quote in circumstances that fall outside the quoting grounds discussed above if the entity has received special authorisation from the Commissioner of Taxation (Commissioner).
8.13 The Commissioner will have a discretion to allow quoting in special circumstances. The discretion allows the Commissioner to authorise a registered entity to quote their ABN, in special circumstances in which the entity would not otherwise be entitled to quote. [Section 13-10]
Periodic quoting
8.14 Periodic quoting allows an entity to supply a single quotation for all their exempt purchases in a period, where that period does not exceed one year. This provides purchasers who are permitted to quote, the flexibility to supply a single quotation to each supplier to cover all their purchases of wine for periods up to one year. [Section 13-15]
8.15 The periodic quotation will be required to be in the form and manner approved by the Commissioner and be made at or before the time of the first dealing. [Section 13-20(1)]
Why is the period limited to one year?
8.16 The limitation reflects the normal maximum period business has indicated is used in most supply contracts. However, the main reason is to ensure that purchasers are able to focus on their responsibilities with respect to quoting and their liabilities on the wine they buy under quotation.