Private ruling: Wine Equalisation Tax (WET) Credit Entitlement
Published: March 2013
Ruling period: 1 April 2012 to 31 March 2013

Ruling: Q1: Are you entitled to a wine tax credit for the wine tax you paid upon import of an alcoholic beverage which you subsequently sold by wholesale sale in Australia? | A1: Yes | Q2: Can you claim the amount of WET tax credit as calculated on a proportional basis? | A2: Yes

Relevant facts and circumstances: You are a specific brewery in Australia You are registered for goods and services tax (GST) You sell various alcohol products by both retail and wholesale sale On various occasions you import the beverage directly from Country X.

Relevant legislative provisions: A New Tax System (Wine Equalisation Tax) Act 1999 - Section 5-5 | A New Tax System (Wine Equalisation Tax) Act 1999 - Section 17-5 | A New Tax System (Wine Equalisation Tax) Act 1999 - Section 33-1

Reasons for decision: Summary: The Wine Tax Credit Table in section 17-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) sets out the situations in which you are entitled to a WET credit. Credit ground CR4 allows for a credit to avoid double taxation on the same wine. Under this credit ground you are entitled to a credit where you have become liable to pay WET on an assessable dealing of wine but have borne WET on the wine prior to the current dealing. The credit amount is the amount of WET you have previously incurred and you become entitled at the time you become liable to pay WET on your assessable dealing. In your case you have imported an alcoholic beverage and paid WET at the point of import to the Australian Customs and Border Protection Service (Customs). The beverage has been sold subsequently by wholesale in Australia. The beverage is included in the definition of wine under section 33-1 of the WET Act and is therefore subject to wine tax. The Assessable Dealings Table in section 5-5 of the WET Act provides the assessable dealings that can be subject to wine tax. In your case you have made a wholesale sale of the beverage which is an assessable dealing and subject to WET under assessable dealings ground AD11b. This dealings ground provides that a wholesale sale by any GST registered entity of imported wine is subject to WET unless an exemption applies. Exemptions for liability include if the dealing is a supply that is GST-free or there is a quote given in respect of the dealing. No exemptions apply in your case and you therefore have become liable to pay wine tax on a current dealing. As you have paid WET to Customs previously and subsequently become liable to pay WET on your wholesale sale of the beverage you are therefore eligible to claim a credit of the WET previously borne on the beverage. That credit is equal to the amount of WET paid to Customs. As stated in Question 1 above, the credit ground CR4 allows for a wine tax credit to be reported in order to avoid double taxation on the same wine. Under credit ground CR4, you are entitled to a credit where you have become liable to pay WET on an assessable dealing of wine but have borne WET on the wine prior to the current dealing. The credit amount is the amount of WET you have previously incurred and you become entitled at the time you become liable to pay WET on your assessable dealing. The proportional method you have used in calculating the WET on the various alcohol products is based on the reported Customs Value. A percentage is determined for the Custom Value on each product reported in the Customs Entry Document. This is achieved by dividing a beverage product Custom Value with the total Customs Value reported on the Customs Entry Document. This method will provide a percentage for each beverage product list on that particular entry document which will be then applied to the 'transport and insurance' (T&I) cost also listed on the entry document. The T&I percentage is then added to the beverage product's custom value giving it the Landing Value which totals the customs value and T&I costs. The proportional method used by you, in distributing the T&I costs over the various beverage products reported in the same Customs Entry documents, is an acceptable form of calculation reflecting the wine tax incurred on the beverage products imported.

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