Excise guidelines for the alcohol industry
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06 PAYMENT OF DUTY
6.1 PURPOSE
This chapter deals with:
- when duty is payable
- when duty is payable under periodic settlement
- when duty is payable under prepayment of excise duty
- when duty is not payable
- how to work out the amount of duty you're liable to pay, including tariff proposals and quotas
- whether you have to account for excisable alcohol products
- how to get a Periodic settlement permission (PSP)
- what your PSP will include
- what to do to deliver alcohol products into the Australian domestic market
- how to lodge excise returns and pay excise duty
- what to do if you have made an error on your excise return, and
- penalties that can apply to offences in relation to payment of duty.
6.2 INTRODUCTION
Excise duty is imposed at the time of manufacture of excisable alcohol products . [109] However, the duty is not required to be paid at the time of manufacture.
This chapter focuses on the payment of duty and when and how much duty is payable.
To ensure the duty is ultimately acquitted, excisable alcohol products remain subject to our control until they are delivered :
- into the Australian domestic market , or
- for export to a place outside Australia. [110]
The liability for duty, imposed at the time of manufacture, can be acquitted by:
- payment of the duty
- export of the goods
- remission, or
- use of the goods in the manufacture of other excisable goods.
Alternatively the liability can be transferred with the goods if they are sold while underbond.
6.3 POLICY AND PRACTICE
6.3.1 WHEN IS DUTY PAYABLE?
When the liability for duty becomes payable depends on how authority is given to deliver the excisable alcohol products into the Australian domestic market. Authority to deliver excisable alcohol products into the Australian domestic market can be given on a continuing basis, known as a periodic settlement permission (PSP), [111] or on an ad hoc basis, known as prepayment of duty. [112]
6.3.2 WHEN IS DUTY PAYABLE UNDER A PERIODIC SETTLEMENT PERMISSION?
Under a PSP the duty is paid after the excisable alcohol products are delivered into the Australian domestic market.
To understand when the duty is paid in the case of periodic settlement requires an understanding of what the permission is and what your obligations are under such permission.
A PSP allows you to report deliveries and to pay duty on a periodic basis after the goods have been delivered into the Australian domestic market. [113] Periodic settlement is the most common arrangement for the delivery of goods into the Australian domestic market.
You may apply for a PSP that covers any recurring seven-day reporting period. [114] You may specify in your application the 7 day period you wish to use, for example, Wednesday to Tuesday. [115] The application must be made on the approved form [116] .
You may apply for a monthly PSP if you are either:
- a small business entity; [117] or
- included in a particular class of business or you deliver goods that are of a particular kind. [118]
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A 'small business entity' [119] is a business with an aggregated turnover for the previous year of less than $2 million or is likely to have an aggregated turnover for the current year of less than $2 million.
A PSP is given in writing and includes:
- your name as the holder of the PSP
- the kind of goods to which the PSP applies
- the place from which the goods may be delivered
- the start date of the PSP and whether it is for a seven-day or monthly period; and
- any special requirements of the periodic settlement. [120]
In considering your application for a PSP we will take into account various issues including compliance with the law and the protection of the excise revenue. We will also consider whether you have complied with the requirements of any previous permission you have been given. If we refuse to give a PSP we will issue you a notice in writing setting out the reasons for the refusal. [121]
A decision we make in relation to the period of a PSP or any condition for a PSP is a reviewable decision. [122]
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If you have a seven-day PSP, you must:
- lodge an excise return, on the due date specified in your PSP (ie the first business day following the end of the seven-day period). The return details the goods you have delivered into the Australian domestic market during the settlement period. [123]
- pay the duty, on the first business day following the end of the seven-day period, on the goods you have delivered within the settlement period. [124]
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If you have a monthly PSP the same requirements apply however you must give your return and pay any excise duty on or before the 21st day of the month following the end of the monthly period. [126]
We may also determine a different PSP period if:
- you do not have any excise duty to pay; [127] or
- you are a small business and have a PSP for a monthly period and have advised us in writing that the business has ceased to be a small business; [128] or
- the business is included in a particular class of business and have a PSP for a monthly period and have advised us in writing that the business has ceased to be included in the class. [129]
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If we determine a different PSP period we will advise you in writing that your PSP is revoked from the day specified in the notice. We will give you another PSP for a seven-day period. [130]
If you advise us in writing that you wish to change the period of your PSP, we may, in writing, revoke your current PSP and give you permission for the preferred period. We will notify you of the day the change comes into effect. [131]
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Example 6A
Buy Me Pty Ltd does not hold an excise licence. A licensed manufacturer manufactures excisable alcohol products for Buy Me under contract. Under the terms of the contract, Buy Me has title to the goods from the time of manufacture and will pay the excise duty.
Buy Me applies for and is granted a PSP.
The PSP is for the period Monday to Sunday. Therefore, Buy Me is able to arrange delivery of excisable alcohol products into the Australian domestic market and defer payment of excise duty, on those goods, until after the end of period. On the first business day after the end of the period (i.e. Monday, unless it is a public holiday in which case it will be due on Tuesday) Buy Me must lodge an excise return for any excisable alcohol products delivered during the period and pay the excise duty owing on those goods.
We will send Buy Me written confirmation, after the excise return has been processed.
6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?
Under prepayment, the duty is paid before the excisable alcohol products are delivered into the Australian domestic market.
If you do not hold a PSP, you must receive a Delivery authority from us before you are allowed to deliver the excisable alcohol products into the Australian domestic market. We require you to pay any applicable duty before we give you a Delivery authority . To request a Delivery authority you need to lodge an excise return (NAT4285).
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6.3.4 WHEN IS DUTY NOT PAYABLE?
There are circumstances in which no duty will be payable. These include where:
- goods are classified to an item or subitem with a FREE rate of duty
- goods are exported
- a remission circumstance applies, or
- excisable alcohol products that are subject to our control are used in the manufacture of other excisable alcohol products.
6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAY?
To work out how much duty you need to pay you will need to:
- check whether your alcohol products are excisable alcohol products according to the Schedule to the Excise Tariff Act [133] and identify the correct duty rate
- work out the volume of alcohol subject to duty, in each tariff subitem, that you deliver into the Australian domestic market
- Total volume X (strength - 1.15%) [134] = dutiable litres of alcohol for beer
- Total volume X strength = dutiable litres of alcohol for all other excisable alcohol products
- multiply the dutiable litres of alcohol by the rate of duty on the excisable alcohol products, and
- add up the total for each subitem to work out total duty to be paid.
Further information on these steps is set out below:
(i) Classifying excisable alcohol products
The Schedule to the Excise Tariff Act lists those goods that, if manufactured or produced in Australia, are subject to excise. The Schedule also contains the rate of duty applicable to the goods. For excisable alcohol products the relevant part of the Schedule is as follows:
| Tariff Item | Sub item | Unit | Description of Goods | Rate |
| 1 |
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| Beer |
|
* |
| 1.1 | LAL | Beer not exceeding 3% by volume of alcohol packaged in an individual container not exceeding 48 litres | $40.43 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.2 | LAL | Beer not exceeding 3% by volume of alcohol packaged in an individual container exceeding 48 litres | $8.08 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.5 | LAL | Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in an individual container not exceeding 48 litres | $47.09 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.6 | LAL | Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in an individual container exceeding 48 litres | $25.33 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.10 | LAL | Beer exceeding 3.5% by volume of alcohol packaged in an individual container not exceeding 48 litres | $47.09 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.11 | LAL | Beer exceeding 3.5% by volume of alcohol packaged in an individual container exceeding 48 litres | $33.16 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.15 | LAL | Beer not exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment | $2.84 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* |
| 1.16 | LAL | Beer exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment | $3.28per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15 |
* | 2 |
| LAL | Other excisable beverages not exceeding 10% by volume of alcohol | $79.77 per litre of alcohol |
| 3 |
|
| Spirits; Other excisable beverages exceeding 10% by volume of alcohol |
|
* |
| 3.1 | LAL | Brandy | $74.50 per litre of alcohol |
* |
| 3.2 | LAL | Other excisable beverages exceeding 10% by volume of alcohol | $79.77 per litre of alcohol |
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| 3.5 | LAL | Spirit that:
| Free |
|
| 3.6 | LAL | Spirit that:
| Free |
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| 3.7 | LAL | Spirit that:
| Free |
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| 3.8 | LAL | Spirit denatured according to a formula determined under section 77FG of the Excise Act 1901 , other than spirit for use as fuel in an internal combustion engine | Free |
* |
| 3.10 | LAL | Spirits not elsewhere included | $79.77 per litre of alcohol |
*Rate of duty as at 2 February 2015. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website.
(ii) Working out quantities of excisable alcohol products
Duty for excisable alcohol products is levied on the quantity of alcohol in the goods and not on the quantity of the goods themselves (eg you do not pay duty on the water contained within the product).
Alcohol quantity is measured in litres of alcohol (Lals), which is calculated by measuring the total volume and multiplying it by the strength, after taking into consideration the rules for measuring volume and strength (see below).
Example 6B
Bottler Brandies manufacturers high quality brandy for the Australian market.
The dutiable quantity of alcohol in 100 cartons, each containing 12 x 700 ml bottles of brandy, at 37.2% alcohol by volume is:
100 x 12 x 0.7 = 840.0 litres x 37.2% = 312.48 Lals
Example 6C
Bottler Brandies also manufactures brandy, which is used to manufacture brandy and cola (RTD) in 250 ml, bottles for the Australian market.
The dutiable quantity of alcohol in 400 bottles at 5% alcohol by volume is:
400 x 0.25 = 100 litres x 5% = 5.00 Lals
The rates of duty for beer specify that duty only applies to the amount of alcohol calculated on the alcohol content above 1.15%. We refer to this amount as the dutiable quantity of beer.
Example 6D
Bevy Brewing manufactures a boutique beer for the Australian market.
The dutiable quantity of alcohol in 100 litres of beer at 5% alcohol by volume is:
100 x (5% - 1.15%) = 3.85 Lals
Rules for measuring volume and strength
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Legislation allows us to make rules for the measurement of volume, weight and alcoholic strength of excisable goods. [136] These determinations ensure an acceptable degree of accuracy in the measurement of volume and strength. They also provide you with certainty that if your procedures and practices comply, then you will be paying the correct amount of duty.
Two legislative determinations provide rules for measuring the volume and strength, respectively, of alcoholic beverages. These are:
(i) Excise (Volume - Alcoholic excisable goods) Determination 2009 (No. 1)
This determination sets out rules for measuring the excisable volume of alcoholic goods and includes guidance in the following key areas:
- measuring and equipment; and
- permitted variations in volume.
Measuring and equipment
Accepted methods for the measurement of volume are by:
- volumetric glassware;
- calibrated tank that uses a dip-stick, tape or sight glass;
- weight and density (where the instruments have been calibrated by an appropriate authority [137] );
- flow meter calibrated by an appropriate authority; or
- any other method that consistently produces a similar result.
Permitted variations
Permitted variations in filling volume for alcoholic goods depends on whether or not the goods are packaged in a bulk container (i.e. a container that has the capacity to have packaged in it more than 2 litres of liquid).
For alcoholic excisable goods packaged in a bulk container, if the volume of the contents:
- is not nominated, the dutiable volume is the actual volume of the contents;
- is nominated, and the actual volume of the contents does not exceed 101% of the nominated volume, the dutiable volume is the nominated volume;
- is nominated and the actual volume of the contents exceeds 101% of the nominated volume, the dutiable volume is a volume equal to the nominated volume plus the volume by which the actual volume of the contents exceeds 101% of the nominated volume.
For alcoholic excisable goods packaged in other than a bulk container, if the volume of the contents:
- is not indicated on a label printed on or attached to the container (or otherwise indicated ) the dutiable volume is the actual volume of the contents;
- is indicated on a label printed on or attached to the container (or otherwise indicated) and the actual volume of the contents does not exceed 101.5% of the labelled (or otherwise indicated) volume, the dutiable volume is the labelled (or otherwise indicated) volume;
- is indicated on a label to be printed on or attached to the container (or otherwise indicated), and the actual volume exceeds 101.5% of the labelled (or otherwise indicated) volume, the dutiable volume is the volume equal to the labelled (or otherwise indicated) volume plus the volume by which the actual volume of the contents exceeds 101.5% of the labelled (or otherwise indicated) volume.
Example 6E
Bottler Brandies needs 100 cartons of brandy to fill an urgent order. As they have no packaged product in stock, they need to bottle some brandy. They use a flow meter to transfer 850 litres of brandy to their bottling tank.
Just prior to commencing the bottling operation, they use a calibrated dip stick to check the volume of brandy in the bottling tank. It contains 850 litres. They also check the temperature of the brandy in the bottling tank. It is 18 degrees Celsius. Using their conversion tables, they calculate that the actual volume of brandy in the bottling tank, at 20 degrees Celsius, is 850.85 litres.
During the bottling run, samples are taken and tested by weighing bottles that had earlier been weighed empty and their weights recorded. The average volume of the bottles tested was found to be 705 ml at a temperature of 20 degrees Celsius.
Volume stated on label 700 ml
Actual volume 705 ml
Difference between labelled and actual volume 5 ml = 0.7%
The tolerance for this product is 1.5% Therefore, the volume of brandy within each bottle is accepted as being 700 ml for this production run.
Example 6F
Bevy Brewing has completed a racking run of 10 kegs of beer.
Each of the kegs has been endorsed with a weight when empty. The actual volume of each keg has been determined by weight and the average volume found to be 52 litres.
In their records, they have nominated that their kegs will be filled with 50 litres.
Nominated volume 50 litres
Actual volume 52 litres
Difference between nominated and actual volume 2 litres = 4%
The tolerance for this product is 1%
Therefore, the volume of beer in the kegs is calculated as being the amount by which they exceed the tolerance.
Nominated volume (50 litres) x 101% = total permissible fill (50.5 litres).
Therefore the volume of beer in the kegs is determined to be 51.5 litres, i.e. the nominated volume plus the amount by which the actual volume exceeds the total permissible fill (50 litres + (2 - 0.5)).
(ii) Excise (Alcoholic strength of excisable goods) Determination 2009 (No. 1)
This determination sets out rules for:
- sampling and analysis;
- measuring and equipment; and
- permitted variations in alcoholic strength.
Sampling and analysis
The alcoholic strength of the excisable goods must be measured by analysing samples of the product after it has reached its final alcoholic strength.
Packaged alcoholic excisable goods may be either:
- sampled in the header vessel immediately prior to packaging; or
- sampled directly from the packaging line.
Sufficient samples must be taken to ensure that the measured strength accurately reflects the actual strength of the excisable alcoholic beverage. What is 'sufficient' is to be judged by the manufacturer, taking into account such things as the circumstances and size of the run and the consistency of the product. For example, if beer in a single run were drawn from different tanks, sampling would need to ensure that any difference in strength between tanks was adequately allowed for in determining the overall strength of the beer in the run.
The alcoholic strength of excisable goods:
- is taken to be the average of the strength of all the sample measurements;
- is to be expressed as a percentage, if the alcohol were measured at 20 degrees Celsius; and
- if calculation for the purposes of ascertaining that volume is made by reference to the specific gravity of alcohol, the calculation is to be made on the basis that, at a temperature of 20 degrees Celsius and in a vacuum, the specific gravity of alcohol in relation to water is 0.79067.
Measuring and equipment
The instruments and processes used to measure the alcoholic strength of excisable goods must be able to produce a result with a tolerance of plus or minus 0.2 percentage points of the actual alcoholic strength.
Possible methods for measuring strength are:
- gas chromatography;
- near infra red spectrometry;
- distillation followed by the gravimetric measurement of the distillate or by measurement in a density meter; or
- any other method that consistently produces a similar result by a documented testing process.
Note: Hydrometers, thermometers and weighing instruments used to measure alcoholic strength must be calibrated at intervals of one year or less against a standard instrument certified by an appropriate authority. [138]
The instruments and measuring techniques authorised by the determination will only provide accurate results if used by appropriately skilled personnel. The determination assumes that the persons measuring the alcoholic strength of excisable goods are adequately skilled in the use of their equipment and techniques and use them appropriately.
Breweries producing less than 100,000 litres of beer in a financial year may use a hydrometer and a formula to determine the alcoholic strength of the beer, provided the formula is supported by a documented testing process that shows the formula produces accurate results. [139] The records are to be retained for 5 years after a formula has ceased to be used.
Individual brews produced in a brew-on-premises shop (BOPS) for non-commercial purposes using commercial equipment do not need to be strength tested, provided the alcoholic strength that the recipe produces has been established using one of the above methods. The strength of the recipes should be re-established at least once a year.
Permitted variations
The permitted variation in strength within which labelled strength may be used in calculations:
- beer not subject to secondary fermentation -
- actual strength may exceed labelled strength by no more than 0.2%
- beer subject to secondary fermentation -
- actual strength may exceed labelled strength by no more than 0.3%
- beverages other than beer -
- actual strength may exceed labelled strength by no more than 0.2%
Example 6G
Bottler Brandies take samples during their bottling run and test the strength. The average strength of the bottles tested was found to be 37.3% at a temperature of 20 degrees Celsius.
Strength stated on label 37.2%
Actual strength 37.3%
Difference between labelled and actual strength 0.1%
The tolerance for this product is 0.2% Therefore, the strength of the bottles of brandy is accepted as being 37.2%.
Example 6H
Bevy Brewing has completed a racking run of 10 kegs of beer. The beer is not subject to secondary fermentation.
Testing has revealed that the strength of the beer is 5.2%.
In their records, they have nominated that their kegs will be filled at a strength of 5.0%.
Nominated strength 5.0%
Actual strength 5.2%
Difference between nominated and actual strength 0.2%
The tolerance for this product is 0.2% Therefore, the strength of the beer is accepted as being 5%.
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Precision requirements for calculations and reporting
When calculating quantities, the acceptable level of precision for working out total volume or litres of alcohol (Lals) is two decimal places.
Example 6I
My Liquor Wholesalers makes the following deliveries during a one week period:
Beer, under subitem 1.1 in the Schedule to the Excise Tariff Act:
756.23 Lals
497.54 Lals
1103.02 Lals
Total = 2356.79 Lals
Brandy, under subitem 3.1 in the Schedule to the Excise Tariff Act:
985.47 Lals
899.14 Lals
Total = 1884.61 Lals
The dutiable total for goods delivered under subitem 1.1 is 2356.79 Lals and for goods delivered under subitem 3.1 is 1884.61 Lals.
However, when completing your excise return, the dutiable quantity in Lals for goods classified to a particular tariff item or subitem may be truncated to one decimal place. Truncation to one decimal place means that anything after the first decimal place is disregarded.
Example 6J
The dutiable total for goods delivered, by My Liquor Wholesalers, under subitem 1.1 in the Schedule to the Excise Tariff Act is 2356.79 Lals and for goods delivered under subitem 3.1 in the Schedule to the Excise Tariff Act is 1884.61 Lals.
On the excise return, My Liquor Wholesalers reports the dutiable totals as:
Subitem 1.1 2356.7 Lals
Subitem 3.1 1884.6 Lals
Excise duty is worked out on the basis of the truncated totals.
(iii) Calculating duty payable on each excisable alcohol product
The rate of duty is set in the Schedule to the Excise Tariff Act. The rates of duty on excisable alcohol products are subject to change. They are indexed twice a year in accordance with increases in the CPI (usually on 1 February and 1 August). [141] For ease of reference we provide a 'working tariff', incorporating indexation changes, on our website.
The rate of duty you use is the rate contained in the working tariff for the subitem. It will also depend on whether you have a PSP. If you do it is the rate applicable at the time you deliver the excisable alcohol products into the Australian domestic market. If you do not have a PSP, then it is the rate applicable at the time you make the pre-payment. [142]
Example 6K
When goods are delivered into the Australian domestic market under a PSP, the rate of duty that applies is the rate in force at the time the goods are delivered.
On 2 February 2015 a manufacturer delivers RTD beverages not exceeding 10% alcohol by volume under its PSP.
The RTDs are 'other excisable beverages' classified to item 2 in the Schedule to the Excise Tariff Act. The rate of duty that applies is the rate in force on 2 February 2015 - $79.77 per litre of alcohol.
Example 6L
When goods are delivered into the Australian domestic market under a prepayment, the rate that applies is the rate in force at the time payment is made.
On 31 January 2015 a manufacturer that does not hold a PSP prepays duty for the delivery of RTD beverages not exceeding 10% by volume of alcohol. The RTDs are delivered on 3 February 2015.
The RTDs are 'other excisable beverages' classified to item 2 in the Schedule to the Excise Tariff Act. The rate of duty that applies is the rate in force on 31 January 2011 - $79.22 per litre of alcohol.
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Example 6M
Bottler Brandies delivers 100 cartons, each containing 12 x 700 ml bottles of brandy, at 37.2% alcohol by volume, into the Australian domestic market on 10 February 2015.
The brandy is classified to subitem 3.1 in the Schedule to the Excise Tariff Act and has a duty rate of $74.50 per litre of alcohol.
Therefore, the duty payable is calculated as follows
100 cartons x 12 bottles x 0.7 litres each = 840.0 litres
840 litres x 37.2% = 312.48 Lals
312.48 Lals truncated to one decimal point = 312.4 Lals
312.4 Lals x $74.50 = $23,273.80.
(iv) Calculating total duty payable
Duty payments are notified to us by including details on your excise return. Excisable alcohol products classified to different items or subitems in the Schedule to the Excise Tariff Act must be shown separately on your excise return on what are referred to as lines.
Example 6N
My Liquor Wholesalers needs to report deliveries for the period ended 8 February 2015.
On their excise return, My Liquor Wholesalers reports their deliveries and duty liability as:
Line | Tariff item | Quantity | Units | Duty rate | Excise amount |
1 | 1.1 | 2356.7 | Lals | $40.43 | $95,281.38 |
2 | 3.1 | 1884.6 | Lals | $74.50 | $140,402.70 |
TOTAL |
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| $235,684.08 |
What happens if the rate changes during my settlement period?
If the rates of duty change within your settlement period, you may lodge two excise returns or, alternatively, include separate lines for the same product on one return; that is:
- one return or line for goods delivered under the old rates, and
- one return or line for goods delivered under the new rates.
Example 6O
The rate of duty per litre of alcohol for other excisable beverages not exceeding 10% by volume of alcohol (item 2 in the Schedule to the Excise Tariff Act) increases on and from 2 February 2015 (a Friday) from $79.22 to $79.77.
Beverage2Go is a licensed excise manufacturer of RTDs classifiable to item 2 in the Schedule to the Excise Tariff Act and holds a PSP with a settlement period that commences each Monday.
Beverage2Go delivers 189.5 Lals of RTDs on Thursday 1 February and 1,041.3 Lals of RTDs over the following three days.
In its excise return for Monday 5 February, Beverage2Go uses separate line entries for RTDs delivered at the old rate and at the new rate:
Line | Tariff item | Quantity | Units | Duty rate | Excise amount |
1 | 2 | 189.5 | Lals | $79.22 | $15,012.19 |
2 | 2 | 1041.3 | Lals | $79.77 | $83,064.50 |
Alternatively, on Monday 4 February, Beverage2Go uses separate excise returns for RTDs delivered at the old rate and at the new rate:
Line | Tariff item | Quantity | Units | Duty rate | Excise amount |
1 | 2 | 189.5 | Lals | $38.70 | $15,012.19 |
and
Line | Tariff item | Quantity | Units | Duty rate | Excise amount |
1 | 2 | 1041.3 | Lals | $39.36 | $83,064.50 |
How can the rate change?
In addition to indexation, as described above, the applicable rate of excise duty can also be affected by:
- changes to the Excise Tariff Act (including tariff proposals), or
- quotas.
Changes to the Excise Tariff Act
Where the Government decides to change the rate of excise applying to excisable goods, or to apply excise to new goods or stop applying excise to certain goods this requires an amendment to the Excise Tariff Act. The Government normally notifies the intention to do this with a tariff proposal.
Tariff proposals
Tariff proposals are a means of changing the Schedule to the Excise Tariff Act (rates can be adjusted up or down or products can be added or removed) so that it is effective from the time it is proposed rather than after the enactment of an Excise Tariff Amendment Act. Most of the processes relate to Parliamentary procedures however there are specific provisions in the Excise Act that provide for the making of tariff proposals when Parliament is not sitting.
Effectively changes to the Schedule to the Excise Tariff Act can be notified in the Parliament or, if the Parliament is not sitting, by notice in the Gazette. We then apply the proposal as if it is law.
The tariff proposal is required to be validated by an Act within 12 months giving retrospective effect to the date of the proposal.
You cannot commence proceedings against us for any action taken to collect the amount set by the tariff proposal during the periods specified in section 114 of the Excise Act. [143]
Effectively this means you need to pay in line with a tariff proposal. Any increases in rates or introduction of new products through a tariff proposal technically does not impose excise but we will protect the revenue by collecting amounts in line with the proposal.
If an amending Act validating the changes outlined within the tariff proposal is not passed within the prescribed periods, then any additional amounts collected will be refunded to you.
Quotas
Quotas are a means of ensuring that people cannot gain an advantage by anticipating rises in excise rates and then delivering more excisable alcohol products than they would normally. Effectively quotas restrict the quantity of excisable alcohol products you can deliver into the Australian domestic market at the existing excise rate. If you exceed your quota for the period you will need to pay the duty at the new rate.
Where we believe that persons are anticipating an increase in the rate of duty, and as a result the clearances of excisable alcohol products in a particular period is likely to be greater than it otherwise would be, we will publish a notice in the Commonwealth Gazette . This notice will state that a particular period is a 'declared period'. [144]
The 'declared period' is the period during which quotas will operate. To establish your quota for the declared period we will consider the amounts of your past deliveries. [145]
Once we have established your quota we will give you a written quota order that specifies the maximum level (which can be nil) [146] of excisable alcohol products that you can deliver into the Australian domestic market at the applicable excise rate in force during the declared period.
If at any time during the declared period you exceed your quota you are required to pay the duty on the excess goods at the existing rate, and in addition we may require you to pay a security, by cash deposit, equal to the duty on the excess goods. [147]
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At the end of the declared period we will reconcile your deliveries with your quota. If you delivered into the Australian domestic market more than your quota, then the duty for the amount in excess of the quota is calculated at the rate in force the day after the declared period ends. Therefore if the rate has gone up you will pay the higher rate of duty on the amount in excess of your quota.
We can vary or revoke a quota order any time before the end of the declared period or 60 days after the making of the quota order whichever occurs last.
6.3.6 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?
If you dispute: [149]
- the amount of duty
- the rate of duty, or
- the liability of goods to duty (for example, whether the goods are excisable)
you may deposit with us the amount of duty demanded.
The deposit of this duty is to be made on an excise return. The excise return should be accompanied by a letter which sets out the details of the dispute. Upon receipt of the amount deposited we will authorise delivery of the goods. You have 6 months after making the deposit to commence court action. If that action is decided in your favour we are obliged to refund you the deposit along with interest of 5% p.a. If the action is not commenced within 6 months or the court does not find in your favour the amount deposited is taken to be the correct amount of duty.
However, you may not commence court action if you have a taxation objection under Part IVC of the Taxation Administration Act 1953 against a private ruling and the matter of the objection:
- relates to the amount or rate of duty; or
- the liability of the goods to duty; and
- the matter of the objection is also in dispute [120A] .
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Section 154 of the Excise Act does not apply in cases where we are of the opinion that any evasion under the Excise Act has been committed or attempted such the goods cannot be delivered into the Australian domestic market.
As authority to deliver the goods is a consequence of making the deposit we consider that this means that section 154 does not apply to goods delivered under a PSP.
6.3.7 DO I HAVE TO ACCOUNT FOR EXCISABLE ALCOHOL PRODUCTS?
Where you have or had possession, custody or control of any excisable alcohol products [150] (subject to our control), you have to be able to satisfactorily account for them.
If we ask you to account for excisable alcohol products, and you cannot satisfactorily do so, then you may be required to pay an amount equal to the duty. If we require this payment you will be given a written demand. The amount you are required to pay is calculated using the rate of duty in force on the day the demand is made.
When requested to account for excisable alcohol products you must be able to show that:
- the goods are still at your premises
- duty has been paid
- duty was not payable (for example, where a remission applied), or
- the goods have otherwise been dealt with in accordance with the excise law (for example, moved under a movement permission or included on an excise return at a concessional rate).
Excisable alcohol products will not have been accounted for satisfactorily just because they were:
- given away for promotional purposes [151]
- stolen from licensed premises, [152] or
- delivered into the Australian domestic market under the mistaken belief that they were not excisable, including those where WET has been paid. [153]
Our decision to demand payment is a reviewable decision. [154]
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6.3.8 - OFFSETTING STOCK SHORTAGES AGAINST STOCK SURPLUSES
In determining whether you have accounted for the excisable alcohol products, we may allow you to offset any stock shortages and surpluses.
Offsetting of stock shortages against stock surpluses is subject to approval by the ATO.
The ATO may only approve offsetting of excisable goods. The ATO cannot approve offsetting of excisable goods against imported goods.
Offsetting can only be applied within individual licensed premises. Offsetting across national operations, for example offsetting of a stock surplus in one premises against a stock shortage in another separate premises will not be approved.
Offsetting will not be approved to overcome deficiencies in a licensee's record keeping or manufacturing processes, for example where a licensee's record keeping is found to be unsatisfactory, the ATO will not approve offsetting to overcome such a deficiency.
Offsetting does not apply in terms of the value of packages but to the amount of excise liability which applies to those packages on a $ (dollar) duty basis.
At the end of each offset period where the duty liability of book stock exceeds the duty liability of actual floor stock, the difference in excise duty is to be paid to the ATO; Book stock is then to be corrected to show actual floor stock.
At the end of each offset period, where actual floor stock exceeds book stock, book stock is to be corrected to show actual floor stock.
Offsetting may be applied generally across excisable alcoholic goods. For example, beer, spirits, liqueurs and other excisable beverages may be offset against each other.
Granting of approval for offsetting
A licensee is required to apply in writing to the ATO for approval to offset. There is no approved application form for a licensee to complete should they wish to apply for approval to offset. The application should provide full details of stock shortages and surpluses and state the reasons for the discrepancies.
The ATO will advise the licensee in writing with details of the permission to offset.
Offsetting period
Offsetting of stock shortages against stock surpluses is normally applied quarterly. If requested, the ATO may approve a shorter or different offset period where it can demonstrate that a shorter or different period would fit in better with the company's accounting system or work practices.
A licensee is required to conduct a stock take at the end of each offset period. The licensee is required to send a stock variation report, together with a request to offset, to the ATO within 30 days of the end of each offset period and to include any offsetting payment with the licensee's next periodic payment.
A licensee may conduct more frequent stock takes. However, any stock shortages or stock surpluses detected during any stock takes conducted within the offset period are to be carried forward to the end of each offset period so that offsetting can be applied.
Stock shortages and stock surpluses may not be carried forward to the next offset period but must be dealt with within the current offset period.
Options for payment of offsetting liability
With ATO approval a licensee may pay offsetting liability by either of the following methods:
- along with a stock variation report, the licensee should send payment for the amount of the excise liability identified as a stock take shortage to:
Excise and EEG Client Services
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640; or
- the licensee should send a stock variation report advising that the licensee's next periodic settlement will include an extra payment for the stock take shortage. The ATO will monitor the next periodic settlement to identify the extra payment as a stock take shortage. The stock variation report should also be sent to Excise and EEG Client Services at the above address.
Example 6P
My Liquor Wholesalers is asked to account for their excisable alcohol products. They carry out a stocktake and find there is a surplus of 1000 cans of Brand X beer @ 5% by volume of alcohol and a shortage of 2000 cans of Brand Y beer at 5% by volume of alcohol.
We will allow them to offset the surplus and shortage. Therefore, there are 1000 cans of beer that have not been accounted for.
A demand will be issued for an amount equal to the excise duty payable on the 1000 cans.
My Liquor Wholesalers corrects its book stock to take up the surplus floor stock of 1000 cans and, when the demand is paid, writes off the shortage of 2000 cans.
Example 6Q
Continuing on from Example 6P, a couple of months later My Liquor Wholesalers decides to conduct another stocktake. They find a surplus of 2500 bottles of Brand A rum at 38% by volume of alcohol and a shortage of 1000 bottles of Brand B whisky at 38% by volume of alcohol.
They decide to offset the surplus and shortage. Therefore, there are no bottles that have not been accounted for but there is a surplus of 1500 bottles.
The licence holder corrects its book stock to take up the surplus floor stock of 2500 bottles of rum and writes off the shortage of 1000 bottles of whisky. They do not need to notify us as there has been no shortfall in the payment of the duty. If a shortfall had occurred, they would need to contact us before the offsetting could occur.
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6.4 PROCEDURES
6.4.1 HOW DO I GET A PSP?
If you apply for a manufacturer or storage licence, you can use your application form to indicate whether you intend to pay excise duty either periodically or prior to delivery. You do not need to complete a separate PSP application.
If you do not have a licence, or you originally chose not to pay excise duty periodically, contact us and provide us in writing your:
- licence details (if you have one), and
- reasons for applying for a PSP.
If we approve your PSP, we will notify you in writing within seven days of receiving your request.
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A request to add or delete delivery establishments from a PSP is treated as a request for a new permission. However, your PSP number will remain unchanged.
We may also:
- refuse to grant a PSP
- impose conditions on a PSP, or
- cancel a PSP.
Failure to comply with a condition may result in the cancellation of the PSP. [155] In such an instance, we would take into account a variety of factors, including your payment history.
A decision to refuse, impose conditions on, or to cancel a PSP is a reviewable decision. [156]
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6.4.2 WHAT DOES MY PSP INCLUDE?
Your PSP in relation to excisable alcohol products will include:
- permission to deliver excisable alcohol products into the Australian domestic market
- conditions, such as:
- settlement period - the period specified during which goods can be delivered [157]
- the type of goods that may be delivered from each premises,
- quantity limits (if any)
- when you must pay the duty
- how you must pay - permitted methods (e.g. EFT, cheque, at a Post Office)
- when and how to lodge your excise return, and
- record-keeping requirements
- a schedule listing:
- one or more premises from which deliveries may be made.
Example 6R
A PSP specifies a settlement period starting on Saturday and ending on Friday. It states that excise returns must be lodged by 4 pm on the first business day after the end of the settlement period. It also says that the duty on deliveries made during the settlement period must be paid at the same time as the excise return is required to be lodged.
An excise return must be lodged, and the duty paid, by 4 pm on Monday for all goods delivered during the settlement period.
When a public holiday falls on a Monday, the excise return is due for lodgment and duty is to be paid by 4 pm on Tuesday, the next business day.
Where you have deliveries in different states of Australia there may be different public holidays in those states. If your returns are prepared by an office in a state different from that in which the delivery into the Australian domestic market occurs, lodgment is due on the next business day in the state where the return is prepared. [158]
6.4.3 WHAT MUST I DO TO DELIVER ALCOHOL PRODUCTS INTO THE AUSTRALIAN DOMESTIC MARKET?
Delivery under periodic settlement permission
If we provide you with a PSP, you must take the following steps to deliver excisable alcohol products into the Australian domestic market:
- deliver the alcohol products into the Australian domestic market: (the products are now no longer subject to excise control )
- complete and submit your excise return in accordance with the timeframes in the permission, and
- pay the duty to us in accordance with the timeframes in the permission.
Delivery after prepaying the excise duty
If you do not have a PSP, you must take the following steps to deliver excisable alcohol products into the Australian domestic market:
- complete and submit your excise return
- pay the duty to us
- obtain a Delivery authority from us, and
- deliver the alcohol products into the Australian domestic market.
6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?
You can lodge your excise return (NAT 4285) via:
the Business Portal
fax at 1300 131 456 ,
mail toAustralian Taxation OfficePO Box 3007PENRITH NSW 2740
You can pay excise duties:
- by electronic funds transfer, including direct credit and BPAY
- in person at a Post Office,
- by credit card; or
- by mail (cheque or money order).
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If you pay the excise duty at a Post Office, you must use a payment advice. To obtain a payment advice booklet, phone us on 13 72 26 or 1800 815 886 and supply us with your Australian Business Number (or Excise Identification Number) and client account number.
Lodgment of an excise return and payment of any duty must be made by the day and time stated on your PSP. [159]
Failure to pay on time may result in the cancellation of your PSP.
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6.4.5 WHAT DO I DO IF I HAVE MADE AN ERROR ON MY EXCISE RETURN?
You may correct errors in your excise return or add new lines by lodging an amending excise return and referencing the number of your original return.
If your amendment results in a shortfall in excise duty paid, you must pay the additional duty when you lodge the amending return.
If your amendment results in an overpayment of excise duty, you may choose to have the amount refunded to you or held as a credit on your account to be offset against your future excise liabilities.
An amending return can only be used to change product details.
If you wish to change other information in your original excise return (for example your individual details or the settlement period) you must lodge a new excise return form as the amending excise return form does not cater for changes to these sections. The new return must contain the amended details and refer to the original return. You should also request cancellation of the original return.
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| Amending excise return instructions available on our website. |
6.4.6 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on payment of duty contact us via:
the Business Portal
phone on 1300 137 290
fax at 1300 130 916 ,
email at alcohol@ato.gov.au , or
mail toAustralian Taxation OfficePO Box 3514ALBURY NSW 2640
We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.
6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?
The following are the penalties that may apply after conviction for an offence.
Move, alter or interfere
If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products. [160]
Deliver
If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products. [161]
Evade
If you evade payment of any excise duty which is payable, the maximum penalty is five times the amount of duty on the excisable alcohol products or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units. [162]
False or misleading statements
If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods. [163]
6.6 TERMS USED
Deliver into the Australian domestic market [164]
'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.
Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).
The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered. [165]
The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.
Excisable alcohol products
Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act and manufactured in Australia.
As these guidelines deal with alcohol products, we have used the term excisable alcohol products.
Excisable alcohol products include:
- beer
- spirits
- premixed drinks known as ready-to-drink (RTD) beverages
- brewed beverages that are not beer, and
- spirit for non-beverage use, including denatured spirit.
Excise control
Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.
Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.
Excise return
An excise return [166] is the document that you use to advise us:
- the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.
Penalty units
Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Remission
A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture, in prescribed circumstances.
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Underbond
This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.
6.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:
Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods
Section 58 - Entry for home consumption etc.
Section 59 - Payment of duty
Section 59A - Declared period quotas - effect on rates of Excise duty
Section 60 - Persons to keep excisable goods safely etc.
Section 61 - Control of excisable goods
Section 61C - Permission to deliver certain goods for home consumption without entry
Section 65 - Rules for working out the volume or weight etc. of excisable goods
Section 77FA - Excise duty to be paid according to labelled alcoholic strength of certain beverages
Section 114 - Time for commencing action
Section 120 - Offences
Section 154 - Deposit of duty
Section 162C - Review of decisions
Section 5 - Duties of excise
Section 6A - Indexation of rates of duty
The Schedule
Section 4AA - Penalty units
6.7.4 Taxation Administration Act 1953
Part IVC
| Date: | Version: | |
| 1 July 2013 | Original document | |
| You are here | 1 July 2015 | Updated document |
| 7 September 2017 | Updated document | |
| 21 February 2018 | Updated document | |
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| 23 December 2021 | Updated document | |
| 25 February 2022 | Updated document | |
| 1 July 2024 | Current document |
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