Excise Bulletin

EB 2000/1

The Wine Equalisation Tax

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Date of Issue: 11 May 2000

Contents

• • About this Bulletin

• • Which alcoholic products are affected?

• • How does the wine tax work?

• • When does the wine tax apply from?

• • Do I need to register for wine tax?

• • What are assessable dealings?

• • What is the rate of the wine tax?

• • Do I need to specify the amount of wine tax on invoices?

• • What exemptions can apply?

• • Are sales to overseas travellers exempt?

• • Is a sale of wine taxable where I export the wine on behalf of the purchaser?

• • What is quoting?

• • What value do I use to calculate the wine tax?

• • Can I claim a rebate for cellar door and mail order sales?

• • How do I calculate the Commonwealth rebate?

• • How do I claim wine tax credits?

• • How do I pay the wine tax?

• • When do I pay the wine tax?

• • What records do I need to keep and how long do I need to keep them?

• • How can I get more information?

• • Appendix A - Definitions and examples of alcoholic products

• • Appendix B - Schematic diagram of how the wine tax works

About this Bulletin

The A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act) introduces a tax on sales, importations and certain other dealings with wine made on or after 1 July 2000. The tax on wine is referred to in this Bulletin as the "wine tax" although it is also known as the wine equalisation tax (WET). The wine tax replaces the wholesale sales tax that applies to similar dealings with wine and similar products prior to 1 July 2000 and is intended to keep the price of wine stable following the introduction of the goods and services tax (GST).

This bulletin explains how the wine tax operates and which alcoholic products are covered by the wine tax.

This bulletin is a ruling for the purposes of section 37 of the Taxation Administration Act 1953. You can rely on the information presented in this document which provides advice on the operation of the wine tax and GST systems.

Which alcoholic products are affected?

The wine tax applies to the following alcoholic products provided they contain more than 1.15% by volume of ethyl alcohol:

• • grape wine;

• • grape wine products such as marsala, vermouth, wine cocktails and creams;

• • fruit wines or vegetable wines; and

• • cider, perry, mead and sake.

In this document all of the above are commonly referred to as "wine". However, in some circumstances, "grape wine" is treated differently, in which case it is referred to separately in this document.

The alcoholic products listed above are defined in the WET Act. Their definitions and examples of the treatment of various types of products are detailed in Appendix A .

Designer drinks and pre-mixed alcoholic products commonly referred to as Ready-to-Drink products will not fall within the definitions of the above products. They will be subject to excise/duty.

How does the wine tax work?

The broad aim of the WET Act is to impose wine tax on dealings with wine in Australia. Dealings which attract wine tax are called assessable dealings and include selling, or using wine or making a local entry of imported wine at the customs barrier.

The wine tax is a once only tax and is designed to fall on the last wholesale sale. Where wine is sold by wholesale to a reseller, e.g., to a distributor, bottle shop, hotel or restaurant, wine tax is calculated on the selling price of the wine. If wine is not the subject of a wholesale sale, e.g., it is sold by retail by the manufacturer at the cellar door or used by the manufacturer for tastings or promotional activities, alternative values are used to calculate the tax payable.

Wine tax is imposed on assessable dealings with wine, unless an exemption applies. If the dealing is taxable, tax is calculated on the taxable value of the dealing. If the wine, or some part of the wine, has already been subject to wine tax, then a credit for that earlier tax effectively reduces the tax payable on the later dealing.

GST applies to all assessable dealings with wine except applications to own use. The wine tax is calculated on the wholesale value of wine exclusive of GST. GST is charged on the selling price of the wine including the wine tax.

An assessable dealing may be exempted from wine tax because the purchaser has a ground for quoting and has made a quote. The Australian Business Number is used for quoting.

Generally, wine tax will be included in the price for which retailers (including bottle shops, hotels, restaurants and cafes) purchase the wine. The retailer is not entitled to a GST input tax credit for wine tax. The system is designed so that wine tax is built into the retailers' cost base and is then effectively passed on in the price of the wine to the end consumer.

Refer to Appendix B for a schematic diagram showing the basics of how the wine tax works.

When does the wine tax apply from?

If the time of a taxable dealing with wine is on or after 1 July 2000, the wine tax applies to the dealing.

Do I need to register for wine tax?

There is no separate registration requirement under the WET Act. Registration relates to registration for GST under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

You will not have a liability to pay wine tax on any assessable dealing with wine (other than a customs dealing) unless you are registered or are required to be registered for GST.

What are assessable dealings?

Wholesale sale

The most common assessable dealing is a wholesale sale. A wholesale sale is a sale to an entity that purchases the wine for the purposes of resale. A wholesale sale of wine is taxable even if the wine has been taxed previously (although there is a credit for the earlier tax). This ensures that tax is imposed on the final wholesale sale.

Retail sale

A retail sale is a sale to an end user of the wine. There are a number of situations where retail sales of wine are assessable dealings. These usually involve retail sales of wine which has not been subject to tax at the wholesale level. The most common retail sale by a winery that attracts the wine tax is a cellar door sale.

Indirect marketing sales and royalty - inclusive sales

There are several types of retail sales of wine (that has borne tax) which the law seeks to subject to tax again. These include indirect marketing sales and royalty-inclusive sales. The reason for taxing these retail sales is to ensure that wine is taxed on a full wholesale value. Of course, in these circumstances, there is a credit available for the tax previously borne on the wine.

There is an indirect marketing sale if the sale is a retail sale by an entity which is not the manufacturer of the wine and the sale occurs in either of the following circumstances:

• • the sale is made by the seller through another entity, other than an employee of the seller, who is acting for the seller under an arrangement to that effect; or

  • • the sale is made from premises that are:

  • • used by an entity, other than the seller, mainly for making retail sales of wine; and

  • • are held out to be the premises of, or premises used by, that other entity.

A royalty-inclusive sale occurs if the following conditions are met:

• • the sale occurs in the course of a business carried on by the seller;

• • the sale is not covered by another category of assessable dealing;

• • the seller incurs a royalty, that is paid or payable, in connection with the wine; and

• • the seller pays a royalty at or before the time of the sale, or might reasonably be expected to incur such royalty after that time. Alternatively, the royalty is incurred by an associate of the seller or by an entity (except the manufacturer of the wine) under an arrangement with either the seller or the associate of the seller.

Application to own use

An "application to own use" of wine is an assessable dealing if the wine has not yet been taxed or, if it has been taxed, if the law regards the earlier taxable dealing as not having recouped the full wholesale value of the wine.

The most common examples of wine being applied to own use are:

• • wine used for cellar door tastings;

• • wine used for tastings at exhibitions;

• • wine used for wine shows;

• • wine used for promotions;

• • wine donated to charity;

• • wine given to retailers, restaurants etc. as samples;

• • wine given to staff;

• • wine taken for personal consumption;

However, there is an exclusion in the definition of "application to own use" for wine which is used as part of the process of manufacture or other treatment or processing of wine or other goods. This means that no liability to wine tax will arise where wine which has not yet been taxed is used in this way. Examples of wine being used as part of the process of manufacture or other treatment or process is where it is used for:

• • blending with other wine;

• • analysis and comparison;

• • testing and checking in the manufacturing process (including maturation);

• • quality control in the manufacturing process (including maturation).

Wine applied to own use will not be subject to the GST provided that where there is a supply of wine, the supply is not for monetary or other consideration.

Untaxed sales

Retail sales of wine which has not previously been subject to the wine tax will be taxable where the seller is registered for GST unless:

• • the wine was obtained under quotation of an ABN; or

• • the wine has previously passed through a taxing point; or

• • the sale is an indirect marketing sale.

These sales are referred to as untaxed sales.

An example of an untaxed sale is a sale of wine by a retailer/restaurant which purchased the wine from a winery which was not registered for GST and did not charge wine tax to the retailer/restaurant. Where the retailer/restaurant is registered for GST it will have a liability to wine tax for the untaxed sales.

Local entry

A local entry of wine at the customs barrier is also an assessable dealing.

What is the rate of the wine tax?

The rate of the wine tax is 29%.

Do I need to specify the amount of wine tax on invoices?

Where you sell wine by wholesale, i.e., to a reseller, for a price that includes wine tax, you must specify the amount of the wine tax on the invoice given to the purchaser. The wine tax can be specified as a separate amount for each item of taxable wine on the invoice on a line by line basis or as a total amount for all the taxable wine on the invoice.

You do not have to specify the amount of wine tax where you sell wine by retail, i.e., to the end user.

What exemptions can apply?

There are 4 categories of exemption:

• • the dealing is a supply that is GST-free (for examples refer to "What is quoting?");

• • there is a quote given in respect of the dealing;

• • the dealing is a customs dealing covered by one of the specified items in Schedule 4 to the Customs Tariff Act 1995; and

• • there is a local entry of wine that has been taxed while in bond.

If an exemption applies to an assessable dealing, wine tax is not imposed on that dealing.

Are sales to overseas travellers exempt?

Cellar door sales to overseas travellers who take the wine with them are not exempt from wine tax or GST.

The overseas travellers may be entitled to a refund of the wine tax and GST under the Tourist Refund Scheme at the point of departure if they still have the wine with them.

Overseas travellers can purchase wine free of wine tax and GST from a Duty Free Store under the sealed bag system.

Is a sale of wine taxable where I export the wine on behalf of the purchaser?

Where you export the wine on behalf of the purchaser (including overseas travellers) exemption from the wine tax and GST applies provided you export the wine within 60 days after the earlier of:

• • the day on which you receive any consideration for the supply of the wine; or

• • the day you give an invoice for the supply of the wine.

You should retain evidence of the export in your records to support treating the wine as exempt.

What is quoting?

Quoting is a mechanism to relieve or defer tax on wine to a later assessable dealing or to give effect to a full exemption from wine tax for a particular supply of wine.

If a quote is made in respect of an assessable dealing, then that dealing is exempt from wine tax.

The only form of quotation is the quotation by a registered entity of their Australian Business Number (ABN). The system of purchasers quoting exemption declarations (EDs) which applied under the wholesale sales tax system does not apply to the wine tax .

Although quoting an ABN enables wine to be supplied without wine tax being charged, the supply may still be subject to GST.

There are 4 general grounds for quoting an ABN. There is a quoting ground if, at the time of quoting, the quoter intends to:

• • sell the wine by wholesale or indirect marketing sale while the wine is in Australia;

• • sell the wine by any kind of sale while it is in Australia and the quoter is mainly a wholesaler;

• • use the wine as a material in manufacture or other treatment or processing; or

• • make a supply of wine that will be GST-free.

A registered entity may also quote in circumstances that fall outside the quoting grounds if the entity has received special authorisation from the Commissioner.

Purchasers who are permitted to quote can quote on each purchase or, where appropriate, give a periodic quote to each supplier to cover their purchases of wine for periods up to one year.

A quotation of an ABN should be made in writing at or before the time of the dealing. The quotation can be made on the order for the wine, or any other document that contains definite identification of the wine that is the subject of the quotation and which is kept by the supplier, e.g., delivery slip, acknowledgment of receipt, duplicate invoice etc.

A quotation of an ABN should be in the following form:

A periodic quotation of an ABN should be in the following form:

There is no need to ask for approval from the Tax Office before using a periodic quotation. Purchasers and suppliers can agree on any period, not exceeding one year, that best suits their needs.

A periodic quotation of an ABN can be accepted by any supplier.

A quotation to Customs should be in the following form:

Note :

• • The Custom's Agent must enter the client's Australian Business Number in the field provided.

• • The Customs Agent must specify in writing, (in the field provided), the particular wine for which they are quoting their client's Australian Business Number.

Quoting by phone, fax and electronic orders:

The Tax Office will accept a two-stage quoting process when goods are ordered and exemption is claimed over the phone. This process consists firstly of an oral reference to the ABN when ordering the wine, followed up by the written quotation within a reasonable time.

In practice, this will allow a purchaser to claim exemption over the phone, and provide the signed written quotation when paying the account. A single written statement that the wine was bought under quotation can cover all wine quoted for during the whole billing period, either by listing the invoice numbers on the quotation or by referring to the statement which includes the invoice numbers.

Where wine is ordered by facsimile, the full form of quotation should be used.

Where wine is purchased from a particular supplier by means of electronic data interchange, there is no need for a written quotation of ABN provided the following conditions are satisfied:

• • the purchaser indicates on the electronic order that their ABN is being quoted;

• • the supplier agrees to accept an electronic order;

• • if the electronic order is lost or there are any other problems, the supplier must be able to provide evidence to the Tax Office that a quotation has taken place, e.g., keep a hard copy; and

• • the purchaser accepts full responsibility for the correctness of any quotation provided.

Examples of situations where the purchaser is entitled to quote (in all cases it is assumed that the purchaser is registered for GST):

• • The purchaser is a wine wholesaler and intends to sell the wine.

• • The purchaser is a wine maker who intends to blend the wine with other wine.

• • The purchaser is a wine maker who intends to use the wine for analysis and comparison with wine produced.

• • The purchaser, although mainly a retailer, intends to sell the wine by wholesale.

• • The purchaser intends to export the wine as a GST-free supply. An example of an export of wine being a GST-free supply is where it is exported within 60 days after the earlier of the day consideration is received or an invoice is issued.

• • The purchaser is a Duty Free Store which sells to travellers who export the wine as accompanied baggage and the Duty Free Store operates under the docket plucking system (this is a GST-free supply by the Duty Free Store).

• • The purchaser is a hospital which provides the wine to patients as part of a hospital meal (this is a GST-free supply by the hospital as it is directly related to hospital treatment).

• • The purchaser is a religious organisation which intends to supply the wine as an integral component of a religious service (this is a GST-free supply by the religious organisation).

• • The purchaser is a University/TAFE College which will supply the wine to students as part of course materials for a winemaker's course (this a GST-free supply by the University/TAFE College)

What value do I use to calculate the wine tax?

Wine tax is calculated on the taxable value of a taxable dealing. For a taxable dealing with wine that is a wholesale sale, i.e., a sale to a reseller, the taxable value is the price for which the wine is sold excluding GST. For most other taxable dealings, the taxable value is the notional wholesale selling price.

In the wine industry, retail sales by a wine manufacturer are a regular occurrence. Sales by cellar door and by mail order are the most common retail sales. Wine is also regularly applied to the manufacturer's own use when tastings are given at cellar door or promotional work is undertaken. The taxable value specified in the WET Act for these dealings with wine is the notional wholesale selling price.

The notional wholesale selling price is also used to determine the taxable value for retail sales which are "indirect marketing sales".

Grape Wine

There are only two methods available when working out the notional wholesale selling price for a taxable dealing that is either a retail sale (including an "indirect marketing sale") of grape wine or an application to own use which is connected with retail sales of grape wine. The half retail price method is used unless the average wholesale price method is chosen.

1. The half retail price method:

Under this method, the notional wholesale selling price:

• • for retail sales of grape wine, is 50% of the price of those sales;

• • for applications to own use connected with retail sales of grape wine, is 50% of the price for which you would normally have sold the wine if the sale were a retail sale.

The retail price is the total amount paid by the customer for the wine including wine tax and GST.

2. The average wholesale price method:

You can choose to use this method if, during the tax period in respect of which the liability to pay wine tax arises, at least 10% by value of all sales of grape wine that:

• • is of the same vintage as the grape wine to which the dealing relates; and

• • is produced from the same grape varieties, or the same blend of grape varieties, as the grape wine to which the dealing relates,

are wholesale sales.

The average wholesale price is worked out using the weighted average of the prices (excluding WET and GST) for wholesale sales of grape wine that fall into the above category.

Example : If, during a tax period, a winery makes 70% of wholesale sales of grape wine of a particular vintage and variety at $80 per dozen, and the remaining 30% at $90 per dozen, the weighted average of the wholesale prices for wholesale sales during the period is:

[70% * $80] + [30% * $90] = $83 per dozen


Wine other than grape wine

The half retail price method is used as the notional wholesale selling price for a taxable dealing that is either a retail sale of wine that is not grape wine or an application to own use connected with retail sales of wine that is not grape wine.

Notional wholesale selling prices for other dealings

The notional wholesale selling price for a taxable dealing with wine that is neither a retail sale of wine, nor an application to own use connected with retail sales of wine is the price (excluding wine tax and GST) for which the wine could reasonably have been expected to be sold by wholesale under an arm's length transaction.

Imported wine

Wine which is taxable at the customs barrier has a taxable value equal to the GST importation value of the wine. The GST importation value is the customs value (Free on Board value) plus the costs of transport, insurance and duty.

Additional amounts included in taxable value

Sometimes, not all the costs associated with wine are reflected in the taxable value. Where these costs are not already included, the WET Act requires amounts to be specifically added to the taxable value. Royalty payments associated with the wine and the value of the container in which the wine is sold are examples of costs which must be added to the taxable value of the wine where they have not already been included.

Royalty - inclusive sales and royalty - inclusive applications to own use

The taxable value for royalty-inclusive sales and royalty-inclusive applications to own use is the amount that would be the price (excluding wine tax and GST) for which you could reasonably have been expected to purchase the wine by wholesale under an arm's length transaction if the manufacturer of the wine had incurred the royalty costs.

Apportionment of amounts

If wine and other goods are packaged and sold together for one inclusive price, then the other goods will be treated separately for the purpose of calculating the taxable value of the wine. The taxable value for the wine will be the value for which the wine could reasonably have been expected to have sold for separately by wholesale.

Sometimes where wine is packed with other goods and sold together for one inclusive price, that sale price is less than the sum of the individual prices of the goods. Effectively, the individual prices of the goods are discounted by being sold as a package. In the absence of evidence to show a better apportionment, the taxable value of the wine should be discounted in proportion to the discount allowed for the package. For example if wine with a wholesale price of $30, a corkscrew with a wholesale price of $15 and a glass with a wholesale price of $5 are sold by wholesale in a package for $40, the discount from the sum of the individual wholesale prices is 20%. This discount is applied to the wine to produce a wholesale taxable value of $24.

Non arm's length transactions (including staff sales, shareholder sales and sales to grape growers)

There is a provision in the WET Act which ensures that in a non-arm's length transaction the wine tax liability or credit is at least equal to the amount it would have been if the transaction had been an arm's length transaction.

Sales to staff, shareholders and grape growers at discounted prices are considered to be non-arm's length sales. Accordingly, wine tax for these sales is required to be paid based on an arm's length transaction, i.e., non discounted prices. In most cases, the taxable value used for arm's length cellar door sales will be acceptable as the taxable value for these non-arm's length sales.

Can I claim a rebate for cellar door and mail order sales?

The Commonwealth and State Governments will operate separate rebate/subsidy schemes. Eligibility requirements for the Commonwealth rebate and some State subsidy schemes may vary. Where you meet the eligibility requirements for both the Commonwealth rebate and the State subsidy scheme in the State you operate the cellar door, the combined effect is that the wine tax payable on cellar door and mail order sales (including internet sales made directly by the winery) made to unlicenced persons, and on applications to own use, up to and including $300,000 (wholesale value) each financial year will be fully rebated. For ease of reference, the dealings which attract the Commonwealth rebate are referred to in this Bulletin as "rebateable dealings".

Producers of wine, including those who supply grapes to contract winemakers to be made into wine, will be eligible for the Commonwealth rebate on their rebateable dealings. Producers who supply grapes to contract winemakers must have some involvement in the winemaking process and assume some financial risk in relation to the wine produced to be eligible for the Commonwealth rebate. This means a producer who does not own the production facilities can be eligible for the Commonwealth rebate. Persons purchasing bottled wine or bulk wine for bottling and sale by cellar door or mail order will not be eligible for a rebate on this wine.

Producers that have a cellar door outlet and also operate a restaurant or cafe from the same or an adjacent site will only be eligible for the Commonwealth rebate for the retail sales made by the cellar door outlet. However, wine which is sold at the cellar door and consumed in the restaurant will be eligible for the rebate.

The Commonwealth will rebate 14% and the States will rebate 15% of the wholesale value of rebateable dealings. The combined rebate payable will be $87,000 when the wholesale value of rebateable dealings for the financial year reach $300,000, comprising a $42,000 rebate from the Commonwealth and a $45,000 rebate from the relevant State.

For rebateable dealings between $300,000 and $580,000 (wholesale value) the Commonwealth rebate will be $42,000 less 15% of the wholesale value of rebateable dealings for the year in excess of $300,000. This means that the Commonwealth rebate gradually reduces to nil. The State governments will not have a ceiling on the rebate they pay so that for rebateable dealings in this range their rebate continues to increase. The effect of this is that where the wholesale value of rebateable dealings for the year is in this range the combined rebate will be limited to $87,000.

Where rebateable dealings for the year exceed $580,000 (wholesale value) the Commonwealth rebate is nil and the rebate payable by the States is 15% of the wholesale value of the rebateable dealings.

The Commonwealth portion of the rebate is claimed on the Business Activity Statement (BAS) by adding the rebate to the total amount of wine tax credits claimed and entering this total amount against Label 1D on the BAS. The 15% rebate payable by the States is claimable from the State Governments in much the same way as under the subsidy schemes they operate to rebate the wholesale sales tax.

The $300,000 threshold (wholesale value) will apply to each licenced cellar door operated by an eligible producer.

How do I calculate the Commonwealth rebate?

1. Wholesale value of rebateable dealings for the year is $300,000 or less

Where the total wholesale value of rebateable dealings for the financial year is $300,000 or less the Commonwealth rebate is 14% of the wholesale value of the rebateable dealings.

If you estimate the wholesale value of rebateable dealings for the current financial year will be $300,000 or less you can claim the Commonwealth rebate in each period. The Commonwealth rebate will be 14% of your rebateable dealings for the period

2. Wholesale value of rebateable dealings for the year is in the range of $300,000 to $580,000

Where the wholesale value of rebateable dealings for the financial year is in the range of $300,000 to $580,000 the Commonwealth rebate for the year is $42,000 less 15% of the wholesale value of total rebateable dealings for the year in excess of $300,000.

Example:

If the wholesale value of rebateable dealings for the year is $430,000, the Commonwealth rebate for the year will be $22,500 [$42,000 - {($430,000 - $300,000) x 15%}].

If you estimate the wholesale value of rebateable dealings for the financial year will be between $300,000 and $580,000 you will need to ensure that you do not overclaim the Commonwealth rebate in the BAS for the early periods in the year.

To prevent overclaiming the Commonwealth rebate you should calculate the total rebate claimable for the year based on the wholesale value of your estimated rebateable dealings for the year. You can then claim the appropriate proportion of the estimated Commonwealth rebate on each BAS (eg if you lodge quarterly you can claim one quarter of the estimated rebate payable for the year in the first 3 quarters).

Example continued:

If you estimate your rebateable dealings for the year will be $430,000 and lodge a quarterly BAS you can claim a Commonwealth rebate of $5,625 ($22,500 ( 4) in the BAS for the first 3 quarters.

When the actual figures are available for your rebateable dealings for the year, you can use the claim included in your final BAS for the year to adjust the Commonwealth rebate claim to the correct amount.

Example continued:

If your actual rebateable dealings for the year are $450,000 the rebate claimed in your BAS for the 4th quarterly period will be $2,625 calculated as follows:

Maximum Commonwealth rebate	$42,000
Less 15% of the wholesale value of rebateable dealings in excess of $300,000	$22,500
Commonwealth rebate claimable for the year	$19,500
Less rebate already claimed ($5,625 x 3)	$16,875
Rebate for 4th quarterly period :	$2,625

3. Wholesale value of rebateable dealings for the year exceeds $580,000

Where the total rebateable dealings for the financial year exceed $580,000 (wholesale value) the Commonwealth rebate is nil.

If you estimate your rebateable dealings for the financial year will exceed $580,000 you should not make claims for the Commonwealth rebate throughout the year. If, at the end of the year, you find that the wholesale value of your rebateable dealings for the year total less than $580,000 you can claim the Commonwealth rebate in your final BAS for the year.

How do I claim wine tax credits?

A registered entity may claim wine tax credits as a reduction in the entity's net amounts due under the GST Act. This is done by entering the total amount of wine tax credits being claimed against label 1D on the BAS.

An entity that is not registered or required to be registered for GST may claim credits as a direct refund from the ATO. Direct refunds are not available for amounts totalling less than $200. However, individual claims may be aggregated to reach the minimum amount. There is no monetary limit for credits claimed as reductions in a registered entity's GST liability.

To be refundable, the wine tax must not have been passed on to the purchaser or, if passed on, has since been refunded to the purchaser.

All claims for credits must be made within 4 years of the time when the credit entitlement arises.

There are 5 broad categories of credit grounds available under the wine tax law:

• • credits for overpaid wine tax;

• • credits to avoid wine being taxed twice;

• • export-related credits;

• • import-related credits; and

• • credits for bad debts.

Examples of situations where credit claims commonly arise are as follows:

• • A wholesaler purchases wine to sell by wholesale but forgets to quote his ABN when purchasing the wine and is charged wine tax. The wholesaler is entitled to a credit for the wine tax borne on the wine when it was purchased.

• • A wine manufacturer purchases wine to blend with other wine but forgets to quote his ABN when purchasing the wine. The wine manufacturer is entitled to a credit for the wine tax borne on the wine when it was purchased.

• • A retailer/wholesaler sells wine by wholesale from stock she purchased at prices which included the wine tax. She is required to pay wine tax on the wine sold by wholesale but is entitled to a credit for the wine tax borne on the wine when it was purchased.

• • A retailer with a stock which was purchased at prices which included wine tax sells wine to a purchaser who quotes an ABN. The retailer is entitled to a refund of the wine tax borne on the wine when it was purchased.

• • A wholesaler sells wine by wholesale in taxable circumstances and pays wine tax on the sale. Subsequently the wholesaler allows a settlement discount on the sale. The wholesaler is entitled to a credit for the amount of wine tax included in the discount allowed.

• • A retailer with stocks of wine which were purchased at prices including wine tax exports wine as a GST-free supply. The retailer is entitled to a credit for the amount of the wine tax borne on the exported wine.

• • A wholesaler sold wine by wholesale and paid wine tax on the sale. Part of the amount of the sale is later written off as a bad debt. The wholesaler is entitled to a credit for a proportion of the wine tax paid equal to the proportion of the debt written off.

How do I pay the wine tax?

If you engage in taxable dealings with wine (other than the local entry of imported wine) you must add the wine tax payable to your net amounts under the GST Act. This is done by entering the total amount of wine tax payable against Label 1C on the BAS. As explained above the total of any wine tax credits are entered against Label 1D on the BAS.

If you import wine you are required to pay the wine tax to Customs at the time of the customs dealing unless you quote your ABN.

When do I pay the wine tax?

For a taxable dealing with wine that is a supply for GST purposes the wine tax payable is attributable to the same tax period or tax periods as they would be for GST. For a taxable dealing that is not a supply for GST purposes (e.g. an application to own use), the wine tax payable is attributable to the tax period in which the time of the dealing occurs.

What records do I need to keep and how long do I need to keep them?

If you are liable to wine tax on a taxable 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 5 years.

The records must be in English or readily accessible and convertible into English. They must also be such as to enable your wine tax liability to be readily ascertained.

How can I get more information?

If you have any questions or need more help contact the Wine Equalisation Tax team in Adelaide on (08) 8208 1387 or (08) 8208 1388.

Commissioner of Taxation
11 May 2000

Appendix A

Wine Equalisation Tax

Set out below are the definitions of alcoholic products covered by the wine equalisation tax and examples of products that satisfy the requirements and products that do not. Alcoholic products which are not covered by the wine equalisation tax are subject to the duty/excise regime.

Appendix B

How the Wine Tax Works

Determining Liability