GST issues registers

Primary production industry partnership

18 Wine equalisation tax

18.1.1

Question

Is there a rebate system for cellar door and mail order sales?

For the source of the ATO view refer to WETR 2009/2 - Wine equalisation tax: operation of the producer rebate for other than New Zealand participants.

Answer

There have been legislative changes to the wine equalisation tax (WET) wine producer rebate. For more about the changes to the WET rebate scheme refer to Wine equalisation tax on ato.gov.au.

This answer previously stated:

Commonwealth and State Governments jointly fund a rebate scheme which effectively means that WET payable on cellar door and mail order sales and applications to own use up to and including $300,000 (wholesale value), annually, will be fully rebated.

Wineries will be expected to pay the WET and GST to the ATO and then claim the WET rebate from the Commonwealth and State Governments. The Commonwealth rebate is claimed on the business activity statement and for sales up to $300,000 (wholesale value) is 14% of the taxable value used to calculate the WET on the cellar door and mail order retail sales and applications to own use.

The Commonwealth rebate tapers to zero for retail sales and applications to own use with a wholesale value between $300,000 and $580,000, Retail sales and applications to own use with a wholesale value above $580,000 attract the 15% State subsidy alone.

To qualify for the Commonwealth rebate an entity must:

•

be the producer of the wine, and

•

hold a producer's licence, a vigneron's licence or an equivalent licence, and

•

sell the wine from premises to which the licence relates.

The Commonwealth rebate does not apply to:

•

wine sold in the course of providing food in a winery restaurant, or

•

wine sold by mail order or by way of the Internet where a commission is payable to a third party.

18.1.2

Question

What is the wine equalisation tax?

Non-interpretative - straight application of the law

Answer

The Wine Equalisation Tax (WET) is a value-based tax on wine. WET is payable on the last wholesale sale or on certain retail sales and applications to own use if no wholesale transaction has occurred, for example cellar door sales by a winemaker or wine used for tastings.

The WET rate is 29%.

18.1.3

Question

To what beverages does the WET apply?

Non-interpretative - straight application of the law

Answer

The WET applies to the following alcoholic beverages provided they contain more than 1.15% by volume of ethyl alcohol:

•

grape wine

•

grape wine products

•

fruit wines or vegetable wines

•

cider or perry

•

mead, and

•

sake

For further explanation see WETR 2009/1 - Wine equalisation tax: the operation of the wine equalisation tax system.

18.1.4

Question

Who will pay the WET?

Non-interpretative - straight application of the law

Answer

The following persons usually have a WET liability and are required to collect and remit WET to either the Australian Taxation Office or Customs:

•

wine manufacturers;

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wine wholesalers; and

•

wine importers.

Generally, WET 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 an input tax credit for the WET. The WET forms part of the retailer's cost base and is passed on in the retail price of the wine to the end consumer. However, if retailers make their own wholesale sales of wine (that is, to a reseller) they may have a WET liability.

18.1.5

Question

How are exports of wine treated?

Non-interpretative - straight application of the law

Answer

Exports of wine which are GST-free supplies will not be subject to WET.

18.1.6

Question

How is the WET applied?

Non-interpretative - straight application of the law

Answer

The WET is levied at the wholesale level. The tax is paid on the value of the goods at the last wholesale sale, or on an equivalent value when there is no wholesale sale.

18.1.7

Question

What happens if I sell to a distributor who then sells to a retailer?

Non-interpretative - straight application of the law

Answer

A quotation system ensures WET is only paid on the last wholesale sale. The Australian Business Number (ABN) is used for WET quotation. In this case, the distributor should quote their ABN to the winery and the WET will then apply when the distributor sells to the retailer.

18.1.8

Question

Who administers the WET?

Non-interpretative - straight application of the law

Answer

The Australian Taxation Office administers and collects the WET for the Australian domestic market. Australian Customs service administers and collects the WET on imports.

18.1.9

Question

Do I need to register for the WET?

Non-interpretative - straight application of the law

Answer

There is no separate registration requirement for the WET. If you are required to be registered for the GST and you will have a WET liability, you will be asked to indicate this on the Australian Business Number (ABN) registration form.

At present the GST registration turnover threshold for GST is $75,000. If your GST turnover exceeds this amount you are required to be registered for GST and any assessable dealings you have with wine under the WET legislation will be taxable.

18.1.10 - Exemption

Question

Is there an exemption from WET based on my level of sales?

Non-interpretative - straight application of the law

Answer

An assessable dealing with wine will be subject to the WET if you are registered or are required to be registered for the GST. At present the GST registration turnover threshold is $75,000. If your GST turnover exceeds this amount you are required to be registered for GST and any assessable dealings you have with wine under the WET legislation will be taxable. Similarly, if your GST turnover is less than $75,000 but you are registered for GST any assessable dealings you have with wine will be subject to WET.

18.1.11

Question

How do I calculate the WET on my wholesale sales?

Non-interpretative - straight application of the law

Answer

The WET is charged at the rate of 29% on the price for which the wine is sold by wholesale before GST is imposed. For example wine is sold by wholesale for $1,000:

•

the WET liability is $290 (29% of $1,000).

•

the GST liability is $129 (10% of {$1,000 + $290}).

•

the total charged for the wine is $1,419.

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

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