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). If you’re now selling to the domestic market, here’s what you need to know.
WET is a value-based tax which generally applies to the last wholesale sale of wine in Australia. If an entity makes or imports wine for consumption in Australia, or sells wine via wholesale, they will normally have to pay WET.
You need to register for WET if you:
Your business activity statement (BAS) will then have labels for you to report WET payable and any WET credits for each tax period.
WET is generally payable by wine producers, wholesalers and importers, rather than retailers (except in certain circumstances).
Transactions that attract WET are called assessable dealings and include:
WET liabilities are reported at label 1C on the BAS.
Wholesale sales are sales made for the purposes of resale – for example a sale by a wine producer to a distributor or retailer.
For wholesale sales, WET is calculated on assessable dealings at 29% of the price for which the wine was sold (less the GST).
Depending on the sale, the price may include things such as freight costs, and may be decreased by discounts or rebates.
It is important that the correct price is used when calculating WET.
Retail sales and own use
Although WET is designed to apply to the last wholesale sale, there will be times when no wholesale sale occurs. WET is still required to be paid on the wine – this most commonly occurs where a retail sale is made by the producer of the wine. In addition, there are some instances where an entity will be required to pay WET on wine applied to their own use if it has not already been subject to WET. This is most commonly where a wine producer consumes wine themselves or gives wine away (for example wine used for tastings or promotional purposes).
In these circumstances a ‘notional wholesale price’ is used to calculate the WET. There are two ways to calculate the notional wholesale price:
Some wine supplies may be exempt from WET. For example:
In very limited circumstances, an entity may be entitled to claim a WET credit. These include where:
An entity is not entitled to claim a credit for WET where wine is purchased for a price that includes WET and is subsequently exported.
WET credits are reported at label 1D on the BAS.
The producer rebate scheme entitles wine producers to a rebate of 29% of the wholesale value (or equivalent) of eligible domestic sales, up to a maximum of $350,000 per financial year.
To be eligible for the rebate an entity must:
The ATO has produced a webinar which explains these concepts in more detail – watch WET Back to Basics
If you need any further help or advice regarding the Wine Equalisation Tax, please contact the ATO at firstname.lastname@example.org