Policy & Issues
Wine Equalisation Tax (WET) Information
The Wine Equalisation Tax (WET) legislation changes were agreed by the Australian Parliament on 17 August 2017 and are now law, known as the Treasury Laws Amendment (2017 Measure No.4) Act 2017. Winemakers who currently access the rebate, or sell grapes to a wine producer who receives the rebate, will need to understand the implications of the changes.
What producers will need to be aware of include:
Selling wine in the domestic market
In response to environmental changes, many businesses within the wine industry are transitioning from exporting wine to selling wine for consumption within Australia. This means they now have new obligations relating to the Wine Equalisation Tax (WET).
Demonstrating proof of grape ownership
To be eligible to claim the WET rebate, ownership of the grapes will mean that some form of contract must be in place at the weighbridge (prior to crushing). This may take the form of an exchange of letters, but a more formal contract is likely to provide more surety.
The ATO will require record keeping to demonstrate ownership of the grapes from the crusher through to the final product.
Implications for contractual arrangements
Retention of title clauses may mean that ownership does not pass to the grape purchaser at the weighbridge. Therefore, such clauses may not satisfy WET eligibility requirements.
Although the intention in the legislation is for ‘parent’ trademarks to cover all the associated trademarks for the eligibility provisions, this needs to be clarified in the ATO guidance.
Distributor model implications
Some distribution models will require different payment forms. For example, if a producer sells to a distributer, they can quote, but if that distributer on-sells to a further distributer, no rebate will be available, but WET will be payable.
The transitional provisions are complex and require clear guidance on the treatment of existing bottled product and that in barrels, as well as the differences applying to table and fortified products.