Private ruling: Fruit and Vegetable Wine
Published: December 2012

Ruling: Q1: Are your fruit based products 'fruit or vegetable wine' products for the purpose of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) and therefore subject to WET? | A1: Yes, your fruit based products are 'fruit and vegetable wines' for the purposes of the WET Act and are therefore subject to WET.

Relevant facts and circumstances: · You are registered for goods and services tax (GST). · You use traditional winemaking techniques. · You plan to produce a blend of products. · No flavours or colours will be added to the fruit wines · No added alcohol will be added to the fruit wines. · You provided the recipe for each of the products: o A number of the products contain fresh fruit, either juiced or crushed and sugar o A fermentation process occurs and wine is then racked and filtered. o Sugar is added to product for taste. o Another product is a blend of the other products where sugar is added to taste. o All products contain between X% and Y% of ethyl alcohol by volume.

Relevant legislative provisions: A New Tax System (Wine Equalisation Tax) Act 1999 Division 31 | A New Tax System (Wine Equalisation Tax) Act 1999 - Subdivision 31-A | A New Tax System (Wine Equalisation Tax) Act 1999 - Section 31-1 | A New Tax System (Wine Equalisation Tax) Act 1999 - Section 31-4 | A New Tax System (Wine Equalisation Tax) Act 1999 - Subsection 31-4(a) | A New Tax System (Wine Equalisation Tax) Act 1999 - Subsection 31-4(b) | A New Tax System (Wine Equalisation Tax) Act 1999 - Subsection 31-4(c) | A New Tax System (Wine Equalisation Tax) Act 1999 - Subsection 31-4(d) | A New Tax System (Wine Equalisation Tax) Act 1999 - Section 33-1 | A New Tax System (Wine Equalisation Tax) Regulations 2000 - Subregulation 31-4.01.

Reasons for decision: Summary: Wine is defined in section 33-1 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) as having the meaning given by Subdivision 31-A of the WET Act. Section 31-1of the WET Act states that wine means any of the following: · Grape wine; · Grape wine products; · Fruit or vegetable wines; · Cider or Perry; · Mead; · Sake. However, wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol. Each of the above headings are further defined in the WET Act. Having regard to these definitions, the fruit based products you intend to produce fall for consideration as fruit or vegetable wines under section 31-4 of the WET Act and are also subject to certain requirements as specified in regulation 31-4.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations). Section 31-4 of the WET Act states that the meaning of a fruit or vegetable wine, taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that: · is the product of the complete or partial fermentation of the juice or must of: o fruit or vegetables; or o products derived solely from fruit or vegetables; and · has not had added any ethyl alcohol from any other source except grape spirit or neutral spirit, as specified in the WET Regulations; and · has not had added any liquor or substance that gives colour or flavour (other than grape spirit or neutral spirit as specified in the WET Regulations); and · contains between 8% and 22% (inclusive) of ethyl alcohol by volume or if grape spirit or neutral spirit has been added, contains between 15% and 22% (inclusive) of ethyl alcohol by volume as specified by the WET Regulations. In order for us to determine whether your products are a fruit and vegetable wine for the purposes of the WET Act and the WET Regulations, we need to consider whether your products meet the requirements above. | Detailed Reasoning - Subsection 31-4 (a): A product is the juice of a fruit and therefore falls within the scope of sub-paragraph 31-4(a)(i) of the WET Act. Fruit is also used in Product 2 and as such also falls within the scope of sub-paragraph 31-4(a)(i) of the WET Act. | Detailed Reasoning - Subsection 31-4 (b) & (c): The recipes for the products indicate that no additional ethyl alcohol (from any source) will be added to any of the products, nor any colours or flavours. Whilst you state sugar will be added for taste, the addition of sugar to fruit wine does not constitute the addition of a flavour, and therefore does not prevent the beverage from being a fruit or vegetable wine per section 31-4 of the WET Act. As such, both paragraphs 31-4(b) & (c) are satisfied. | Detailed Reasoning - Subsection 31-4 (d): The strength proposed for the products all fall between X% and Y% alcohol by volume and as such the strength proposed is within the range allowed by paragraph 31-4(d). The formulation proposed for all products, conforms to the requirements of section 31-4 of the WET Act and WET Regulations, meeting the definition of fruit and vegetable wine hence subject to WET. Accordingly, the formulation proposed for all of your fruit based products, conform to the requirements of section 31-4 of the WET Act and WET Regulations and as such are considered 'fruit or vegetable wine' products for the purpose of WET Act and are therefore subject to WET. Wine tax is imposed on assessable dealings with wine, unless an exemption applies. If the dealing is taxable, wine tax is calculated on the taxable value of the dealing. If the wine, or some part of the wine, has already been subject to a taxable dealing, then a credit for that earlier tax may be claimed as an offset against the tax payable on the later dealing. More information regarding WET can be obtained from Wine Equalisation Tax Ruling WETR 2009/1 Wine equalisation tax: the operation of wine equalisation tax system.

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