Private ruling: Product classification
Date of advice: 1 November 2016
Published: December 2016
Ruling period: 1/1/2016 – 30/6/2019
Date scheme commenced: 1/1/2016

Ruling: Q1: Is your product a ‘grape wine product’ under section 31-3 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)? | A1: Yes, your product is a ‘grape wine product’

Relevant facts and circumstances: 1. You intend to manufacture an alcoholic beverage and have provided details of the ingredients and the production process 2. The product will contain more than 700 millilitres per litre of grape wine, which has not been subject to any process to strip colour or flavour from the wine 3. Your product will contain both fruit juice concentrate and artificial fruit flavouring. Neither the juice nor the flavour extract will contain ethyl alcohol. The carrying medium of the flavour extract is propylene glycol. Propylene glycol and ethyl alcohol have different formulas: a. Propylene glycol - C 3 H 8 O 2. b. Ethyl alcohol – C 2 H 5 OH. 4. The final product contains 8.1% by volume of ethyl alcohol

Relevant legislative provisions: A New Tax System (Wine Equalisation Tax) Act 1999 Subdivision 31-A | A New Tax System (Wine Equalisation Tax) Act 1999 Section 31-3 | A New Tax System (Wine Equalisation Tax) Act 1999 Section 33-1

Reasons for decision: Summary: Wine is defined in section 33-1 of the WET Act as having the meaning given by Subdivision 31-A of the WET Act. Section 31-1 in Subdivision 31-A of the WET Act provides that wine means any of the following: ● grape wine ● grape wine products ● fruit or vegetable wine ● cider or perry ● mead ● sake. However, wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol. All of the beverages set out above are separately defined for the purposes of the WET Act and, of these definitions, ‘grape wine product’ is the only one that is relevant in your circumstances. Grape Wine Product Grape wine product is defined in section 31-3 of the WET Act. It is also subject to certain requirements as specified in regulation 31-3.01 of the WET Regulations. A grape wine product, taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that: a) contains at least 700 millilitres of grape wine per litre; and b) has not had added to it, at any time, any ethyl alcohol from any other source, except: I. grape spirit; or II. alcohol used in preparing vegetable extracts (including spices, herbs and grasses); and c) contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol; and d) has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial. Contains at least 700 millilitres of grape wine per litre Grape wine, taking into account both section 31-2 of the WET Act and WET Regulation 31-2.01, is a beverage that: a) is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes; and b) contains not more than 22% by volume of ethyl alcohol It does not cease to be a grape wine where grape spirit, brandy or both grape spirit and brandy have been added. The wine you intend to use as the base of your product meets the definition of grape wine under section 31-2 of the WET Act and regulation 31-2.01 of the WET Regulations and, there will be no carbon fining or processes to strip colour or flavour from the wine. Your product will contain more than the requirement of 700 millilitres per litre (the equivalent of 70% of the finished product). Has not had added to it, at any time, any ethyl alcohol from any other source You intend to use an artificial fruit flavour and fruit juice concentrate in your product. You have provided a product specification sheet from the supplier of the artificial fruit flavour which shows the solvent to be “1,2 propanediol (FEMA 2940)” - also known as propylene glycol. From the definition of grape wine product, it is evident that ethyl alcohol (other than ethyl alcohol derived from grape spirit or ethyl alcohol used in preparing vegetable extracts) is the only alcohol which, when added to a beverage, precludes the beverage from satisfying the requirements for a 'grape wine product'. Propylene glycol has a different chemical formula from ethyl alcohol. The chemical formula for each chemical compound is as follows: Ethyl alcohol – C 2 H 6 O Propylene glycol – C 3 H 8 O 2 As propylene glycol is a different chemical compound from ethyl alcohol, it follows that propylene glycol may be added to a beverage without the beverage being precluded from satisfying the definition of ‘grape wine product’. Given that neither the fruit flavour extract nor the fruit juice concentrate contain ethyl alcohol, the product meets this criteria of a ‘grape wine product’. Contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol The final alcohol strength of the product will be 8.1% a/v. This falls within the acceptable range for a grape wine product. Has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial. From 10 September 2009, subregulation 31-3.01(2) of the WET Regulations amended the definition of ‘grape wine product’ to provide that a grape wine product must not have added to it the flavour of any alcoholic beverage (other than wine) whether that added flavour is natural or artificial. It is the Commissioner’s view that the preclusion of the addition of the ‘flavour of an alcoholic beverage’ includes more than one added flavour that, when combined together, is the flavour of an alcoholic beverage (other than wine) whether such flavours are natural or artificial. The formula you provided shows the only ingredients in your product are wine, artificial fruit flavour and concentrated fresh fruit juice. None of these ingredients, individually or combined, would be considered to be the flavour of an alcoholic beverage (other than wine).