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Excise guidelines for the alcohol industry

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14 WINE

14.1 PURPOSE

14.2 INTRODUCTION

14.2.1 WHAT TAXES APPLY TO WINE, INCLUDING FORTIFIED WINE?

14.2.2 WHAT IS THE WINE EQUALISATION TAX?

14.3 POLICY AND PRACTICE

14.3.1 WHAT IS WINE?

14.3.2 ALCOHOLIC STRENGTHS FOR FORTIFIED WINE?

14.4 PROCEDURES

14.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

14.5 LEGISLATION (quick reference guide)

14.1 PURPOSE

This chapter deals with wine and the wine equalisation tax (WET).

14.2 INTRODUCTION

14.2.1 WHAT TAXES APPLY TO WINE, INCLUDING FORTIFIED WINE?

Two taxes may apply to wine, including fortified wines, provided they contain more than 1.15% by volume of ethyl alcohol:

  • the wine equalisation tax (WET), or
  • excise duty.

The following table sets out whether you need to pay excise duty or WET for fortified wine or grape must. ( Note : Wine subject to WET can only be fortified with the types of spirit listed in the table.)

Product

WET

Excise duty

Grape wine fortified with grape spirit and/or brandy

Alcoholic strength:

 

 

  • 22% or less

Y

N

  • more than 22%

N

Y

Grape wine products fortified with grape spirit and containing at least 70% grape wine

Alcoholic strength:

 

 

  • less than 8%

N

Y

  • 8%-22% inclusive

Y

N

  • more than 22%

N

Y

Fruit or vegetable wine fortified with grape spirit or neutral spirit

 

 

Alcoholic strength:

 

 

  • less than 15%

N

Y

  • 15% - 22% inclusive

Y

N

  • more than 22%

N

Y

Cider and perry

Cannot be fortified

*

Mead fortified with grape spirit or neutral spirit

Alcoholic strength:

 

 

  • less than 15%

N

Y

  • 15% - 22% inclusive

Y

N

  • more than 22%

N

Y

Sake

Cannot be fortified

*

* Where these products are fortified they will be subject to excise duty.

If you need to pay excise duty refer to Chapter 12 - Spirits and other excisable beverages .

For information on record keeping requirements for fortified wines refer to Chapter 13 - Concessional spirit .

14.2.2 WHAT IS THE WINE EQUALISATION TAX?

The wine equalisation tax (WET) is a value based tax applied to dealings with wine. Dealings with wine include selling wine, using wine, or making a local entry of imported wine at the customs barrier.

There are some exemptions, including:

  • dealings that are GST-free supplies or non-taxable importations
  • exemptions based on quoting [397]
  • if the goods are covered by Schedule 4 of the Customs Tariff Act 1995
  • if the wine has been taxed while in bond, i.e. under the control of Customs, and
  • goods returned to Australia in an unaltered condition. [398]

The WET rate is 29% of the wholesale sale value.

Generally, WET is included in the price for which retailers (including bottle shops, hotels, restaurants and cafes) purchase the wine.

The ATO administers and collects WET on assessable dealings with wine in Australia. Payment is included at Label 1C of your Business Activity Statement (BAS). The Department of Home Affairs administers and collects WET on imports.

There is also a rebate scheme which provides a rebate of wine tax for eligible producers of wine. Producer rebates and other wine tax credits are claimed at Label 1D of your BAS.

If you are liable to wine tax on a dealing or are entitled to a wine tax credit, you are required to keep records of all transactions that relate to the dealing or credit claim for a period of five years after completion of the transactions or acts to which they relate. The records must be in English or readily accessible and convertible into English. Your wine tax liability must also be able to be readily determined from your records. [399]

Wine Equalisation Tax Ruling WETR 2009/1 [400] explains how the wine tax operates, which alcoholic products are covered by the WET and your record keeping responsibilities. Wine Equalisation Tax Ruling WETR 2009/2 [401] explains the operation of the wine producer rebate for producers of wine that are registered for GST in Australia, and Wine Equalisation Tax Ruling WETR 2006/1 [402] explains the operation of the producer rebate for producers of wine in New Zealand that have their wine exported to Australia.

For more information about WET, visit our website at www.ato.gov.au

14.3 POLICY AND PRACTICE

14.3.1 WHAT IS WINE?

WET applies only to products that fall within the definition of 'wine'. [403]

Wine is defined as one of the following beverages, containing more than 1.15% alcohol by volume:

  • grape wine
  • grape wine products
  • fruit or vegetable wine
  • cider or perry
  • mead, and
  • sake.

Each of these products is defined in the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act). Some of them are further defined in the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).

The table below gives the definition of the products subject to WET:

Definitions

Examples

Grape wine [404] is a beverage that:

  • is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes, and
  • does not contain more than 22% alcohol by volume.

Grape wine continues to be grape wine even though grape spirit or brandy is added to it (within the strength limit of 22%).

Includes:

  • table wines (red, white and ros é )
  • sparkling wines
  • fortified wines, and
  • dessert wines

Grape wine products [405]

A grape wine product is a beverage that:

  • contains at least 70% grape wine;
  • has not had added to it any ethyl alcohol from any other source, except
  • grape spirit; or
  • alcohol used in preparing vegetable extracts (including spices, herbs and grasses) where the alcohol:
    • is only used to extract flavours from vegetable matter;
    • is essential to the extraction process; and
    • adds no more than one percentage point to the overall alcoholic strength by volume of the beverage;
  • has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial; and
  • contains between 8% and 22% (inclusive) of ethyl alcohol by volume.

Grape wine products are generally traditional products that have been produced by the wine industry for many years.

Grape wine products include:

  • vermouth;
  • marsala;
  • green ginger wine
  • wine based cocktails and creams that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial; and
  • imitation liqueurs (wine based) that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial;

but only where they satisfy the requirements in the column on the left.

Grape wine products do not include:

  • wine coolers (unless they satisfy the requirements in the column on the left);
  • ready to drink (RTD) or designer drinks that contain a wine base (unless they satisfy the requirements in the column on the left);
  • RTDs or designer drinks that contain spirits (other than grape spirit); RTDs or designer drinks containing grape spirit must also satisfy the requirements in the column on the left, and
  • Spirit based (other than grape spirit) cocktails, creams and liqueurs.

A fruit or vegetable wine [406] is a beverage that:

  • is the product of the complete or partial fermentation of the juice or must of fruit or vegetables, or products derived solely from fruit or vegetables
  • has no added alcohol from sources other than grape spirit or neutral spirit
  • has no added colour or flavour (apart from any coming from grape spirit or neutral spirit), and
  • contains:
  • between 8% and 22% (inclusive) alcohol by volume, or
  • if grape spirit or neutral spirit has been added, contains between 15% and 22% (inclusive) alcohol by volume.

Note 1: grape spirit or neutral spirit can only be added if the beverage meets the definition of fruit or vegetable wine before the spirit is added.

Note 2: The addition of sugar to fruit wine post fermentation does not constitute the addition of a flavour. [407] Notwithstanding this, sugar cannot be added to wine products in amounts relative to other fermentable material such that the sugar cannot be properly described as an 'additive'.

Includes:

  • table wine
  • sparkling wine
  • fortified wine

derived from fruit or vegetables.

Does not include:

  • ready-to-drink (RTD) or designer drinks that contain alcohol fermented from fruits, such as lemons and oranges

(unless the product satisfies the requirements in the first column).

Cider and Perry [408] are beverages that:

  • are the product of the complete or partial fermentation of the juice or must of apples or pears
  • have no added any ethyl alcohol from any other source; and
  • have no added liquor or substance (other than water or the juice or must of apples or pears) that gives colour or flavour.

Note 1: Adding cane sugar to apple or pear juice prior to the fermentation of that apple or pear juice will not prevent the resulting beverage product from being 'cider' as defined in section 31-5 of the WET Act provided that the amount of sugar added does not change the character of the beverage such that it can no longer be described as the product of apples or pears. [409]

Includes:

  • traditional cider and perry
  • draught cider and perry
  • dry cider and perry
  • sweet cider and perry

Do not include:

  • cider or perry that has had lemon, blackcurrant or other fruit flavourings added
  • cider or perry that has had cola or other flavourings added.

Mead [410] for WET purposes is a beverage that:

  • is the product of the complete or partial fermentation of honey;
  • has not had added any ethyl alcohol from any other source, except grape spirit or neutral spirit;
  • has not had added to it any liquor or substance that gives colour or flavour other than:
    • grape spirit or neutral spirit;
    • honey, herbs and spices, all of which can be added at any time;
    • caramel, provided it is added after the fermentation process is complete; or
    • fruit or product derived entirely from fruit, provided:
  • the fruit or product has not been fermented;
  • the fruit or product is added to the mead before fermentation of the mead; and
  • after the addition of the fruit or product and before fermentation the mead contains not less than 14% by volume of honey and not more than 30% by volume of the fruit or product;
  • if fruit or product is added the mead contains between 8% and 22% (inclusive) of ethyl alcohol by volume, and
  • if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume. However, grape spirit or neutral spirit can only be added if the beverage meets the definition of mead before the grape spirit or neutral spirit is added.

Note: If fruit or product derived from fruit is added and it contains concentrated fruit juice or fruit pulp, the proportion of fruit or product in the mead is worked out by assuming that it has been reconstituted according to the recommendations of the manufacturer of the concentrated fruit juice or pulp.

Mead includes:

  • honey mead;
  • fortified mead;
  • liqueur mead; and
  • spiced mead.

Sake [411] is a beverage that:

  • is the product of the complete or partial fermentation of rice
  • has no added alcohol, and
  • has no added colour or flavour.

Includes:

  • sake (produced by fermentation), and
  • rice wine

Does not include:

  • distilled sake.

14.3.2 ALCOHOLIC STRENGTHS FOR FORTIFIED WINE?

The Excise Act does not specify strength requirements for fortified wines. However, there are minimum strength requirements for grape wine products and fruit or vegetable wine under the WET Act. Also, the Australia New Zealand Food Standards Code states that fortified wine must contain at least 15% by volume of ethanol at 20 ° C.

The WET legislation [412] and the Australia New Zealand Food Standards [413] both require that fortified wine must contain not more than 22% by volume of ethyl alcohol at 20 ° C.

14.4 PROCEDURES

14.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on wine or the wine equalisation tax contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916 ,
email at alcohol@ato.gov.au , or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

14.5 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

14.5.1 A New Tax System (Wine Equalisation Tax) Act 1999

Division 7 - Exemptions

Section 31-1 wine

Section 31-2 - Meaning of grape wine

Section 31-3 - Meaning of grape wine product

Section 31-4 - Meaning of fruit or vegetable wine

Section 31-5 - Meaning of cider or perry

Section 31-6 - Meaning of mead

Section 31-7 - Meaning of sake

14.5.2 A New Tax System (Wine Equalisation Tax) Regulations 2000

Regulation 31-2.01 - Grape wine

Regulation 31-3.01 - Grape wine products

Regulation 31-4.01 - Fruit or vegetable wine

Regulation 31-6.01 - Mead

14.5.3 Taxation Administration Act 1953

Section 382-5 - Keeping records of indirect tax transactions

Excise guidelines for the alcohol industry
  Date: Version:
  1 July 2013 Original document
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