Wine Equalisation Tax Ruling WETR 2009/1
Date of effect: 24 June 2009

What this ruling is about: 1. The A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) deals with tax on sales, importations and certain other dealings with wine which take place on or after 1 July 2000. The tax on wine is referred to in this Ruling as WET. 2. This Ruling explains how the system operates, and which alcoholic products are covered. 3. [Omitted.] 4. Unless otherwise stated, all legislative references in this Ruling are to the WET Act and all references to the WET Regulations are to the A New Tax System (Wine Equalisation Tax) Regulations 2000. 5. [Omitted.] 5A. [Omitted.]


Ruling: Which alcoholic products are affected: 8. WET applies to the following alcoholic beverages provided they contain more than 1.15% by volume of ethyl alcohol: [2] 9. We refer to all of these as wine throughout this Ruling, except when we specify grape wine, which is treated differently in some cases, in which case it is referred to separately in this Ruling. Grape wine [3] 10. Grape wine is a beverage that: 11. A beverage does not cease to be the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes merely because grape spirit, brandy, or both grape spirit and brandy have been added to it. In other words, fortified wines can still meet the requirements of grape wine. 12. Grape wine includes: Grape wine products [4] 13. [Omitted.] 13A. A grape wine product is a beverage that contains at least 70% grape wine and: 14. The exclusion of the addition of ethyl alcohol from any other source means that if ethyl alcohol other than grape spirit or alcohol used in preparing vegetable extracts is added then the resulting beverage is not a grape wine product. [4EA] 14A. There are additional and specific criteria that must be satisfied with respect to the addition of alcohol used in preparing vegetable extracts, in order for a beverage to be a grape wine product. [4EB] 15. We consider that the reference to 'alcohol used in preparing vegetable extracts' in section 31-3, is limited to alcohol used in the extraction of flavours from vegetable matter that is essential to the extraction process. It does not extend to alcohol that has been used as a carrying medium for flavours made from vegetable extracts. 16. The types of beverage covered by the definition [5] include grape wine products such as wine cocktails, flavoured wines and Irish style cream drinks. The definition includes a minimum and maximum alcohol band to prevent low strength spirits from accessing the WET. 16A. A grape wine product must not have added to it the flavour of any alcoholic beverage5A (other than wine) whether that added flavour is natural or artificial. This is to ensure that where grape wine products mimic the taste of a spirit flavoured beverage, they are taxed at the same rate as those beverages. [5AA] Example 1 - addition of the flavour of an alcoholic beverage to wine 16B. An entity manufactures alcoholic beverages by adding flavours to wine. One of the flavours is a strawberry daiquiri flavour. The strawberry daiquiri flavour does not contain alcohol. The strawberry daiquiri flavour is the flavour of an alcoholic cocktail and is therefore the flavour of an alcoholic beverage. The addition of the strawberry daiquiri flavour to the wine means that the resulting beverage is not a grape wine product. 16C. We consider that the preclusion of the addition of the 'flavour of any other 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. We also consider that the way in which the product is named and marketed will have an impact on (but will not be determinative of) whether the beverage has had added to it flavours designed to mimic the taste of a beverage other than wine and, therefore, whether it will meet the definition of a grape wine product. Example 2 - addition of multiple flavours and named after a spirit-based beverage 16D. An entity manufactures an alcoholic beverage by adding flavours to wine. These flavours include lime, mint and sugar and the resulting product is called 'Mystic Mojito'. A traditional Mojito is a spirit-based cocktail consisting of rum, lime juice and sugar. The addition of these flavours to wine, coupled with the name, indicate the product intends to mimic an alcoholic beverage other than wine and therefore would not be a grape wine product. Example 3 - multiple flavours not named after a spirit-based beverage 16E. An entity manufactures an alcoholic beverage by adding pineapple and coconut flavours, and cream, to wine. The product is marketed as 'Pineapplecolada'. The ingredients, when combined, are that of a Pina Colada - a spirit-based beverage. Despite not being marketed as a Pina Colada, the product would not be a grape wine product as the combination of the flavours are that of an alcoholic beverage other than wine. 17. It is inherent in the definition of grape wine product [5AB] , and the further explanation in the Explanatory Memorandum to the Excise Tariff Amendment (2009 Measures No. 1) Act 2009 that grape wine products are to be limited to beverages where the alcohol content is attributable to grape wine and/or grape spirit. The allowance of alcohol in preparing vegetable extracts [5B] recognises that in making flavours from vegetable matter alcohol is often used in the process. For example, in the manufacture of a flavour infused grape wine product, such as vermouth, herbs, spices or other vegetable matter could be added as an infusion. Alternatively, they could be macerated and steeped in alcohol as a means of extracting the flavours and then added to wine or an existing grape wine product. 18. When flavours are extracted from vegetable matter using alcohol (for example, by the vegetable matter being macerated and steeped in alcohol) and the alcohol is essential to the extraction processes, its addition will not preclude the resulting beverage from being a grape wine product. The addition of alcohol essential to the flavour extraction processes must add no more than one percentage point to the overall alcoholic strength of the beverage. [5C] 19. In contrast to the flavouring process described above, concentrated flavours may be made from vegetable matter. Before being added to wine or an existing grape wine product, these concentrated flavours are combined with additional ethyl alcohol which acts as a carrying medium for the flavour. The combined flavour and additional ethyl alcohol is then added to the wine or existing grape wine product. In these circumstances if the ethyl alcohol with which the flavour is combined before being added to the wine or an existing grape wine product is not grape spirit, the resulting beverage will not be a grape wine product. This is because the additional ethyl alcohol into which the flavour was incorporated was not used in the process of preparing the vegetable extract and was not essential to the extraction process. 20. [Omitted.] 20A. Grape wine products include the following: but only where the specific requirements set out in regulation 31-3.01 are met. 21. Grape wine products do not include the following: Fruit or vegetable wine [6] 22. Fruit or vegetable wine is a beverage that: 23. Fruit or vegetable wines include: 24. Fruit or vegetable wines do not include RTDs or designer drinks that may contain alcohol fermented from fruits such as lemons, oranges, etcetera (unless they satisfy the requirements in paragraph 22 of this Ruling). Cider or perry [7] 25. Cider or perry is a beverage that: 26. Traditionally cider has referred to fermented apple juice and perry has referred to fermented pear juice, however, the structure of the definition allows for cider to contain pear juice and perry to contain apple juice. [8] 27. Cider and perry include: 28. Cider and perry do not include: Mead [9] 29. [Omitted.] 30. Mead for WET purposes is a beverage that: 31. If fruit or product derived from fruit is added and it contains concentrated fruit juice or fruit pulp, the proportion of fruit or product in the mead is worked out by assuming that it has been reconstituted according to the recommendations of the manufacturer of the concentrated fruit juice or pulp. 32. [Omitted.] 33. Mead includes: Sake [10] 34. Sake is a beverage that: 35. A beverage that consists of distilled sake is not wine for the purposes of the WET Act. 36. Sake includes: | The meaning of beverage in the context of the WET Act: 37. Intrinsic in the definitions of each of the products to which the WET Act applies, (see paragraphs 10 to 36 of this Ruling), is that amongst other things, the relevant product must be a 'beverage'. That is, in addition to the other specified requirements, the product must be a 'beverage' for it to be subject to WET. 38. Beverage is not defined in the WET Act and so takes its ordinary meaning. We consider a 'beverage' to be a drink of any kind, which is generally swallowed to quench thirst or for nourishment. [11] 38A. Generally, a beverage will be capable of being consumed through a straw and is thin enough to be consumed from a glass. 39. As a matter of everyday usage and language, wine is considered to be a drink and therefore is a 'beverage' in accordance with the ordinary meaning of that term. This is reflected in the dictionary definition of wine which refers to wine as a beverage. [11A] 40. The test of whether a beverage is wine is to be applied to the finished product intended and suitable for consumption, and not to liquid that exists during the stages of production. [11B] 41. Raw wine is the result of the initial (primary) fermentation of grapes or other fruits or vegetables. The wine is usually finished by stabilising, fining and filtering, secondary fermentation (malolactic fermentation) if needed, maturation and racking to clarify the wine by removing unwanted solids. In these circumstances, the test of whether a beverage is wine must be applied to the finished wine (intended and suitable for consumption), and not to the raw wine. 42. [Omitted.] 43. [Omitted.] | Rate of WET: 44. The amount of tax is calculated by multiplying the taxable value [12] of the assessable dealing by 29%. [13] | How does WET work?: 45. The broad aim of the WET Act is to impose WET on dealings with wine in Australia. WET is applied to both Australian produced wine and imported wine. Dealings which attract WET are called assessable dealings and can include selling wine, using wine, or making a local entry of imported wine at the customs barrier. 46. WET is normally a once only tax designed to fall on the last wholesale sale. Where wine is sold by wholesale to a retailer, for example, to a distributor, bottle shop, hotel or restaurant, WET is calculated on the selling price of the wine excluding wine tax and Australian goods and services tax (GST). [14] If wine is not the subject of a wholesale sale, for example, it is sold by retail by the manufacturer at the cellar door or used by the manufacturer for tastings or promotional activities, alternative values are used to calculate the tax payable. 47. WET is imposed on assessable dealings with wine, unless an exemption applies. If an exemption does not apply, then the dealing is taxable, and WET 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 [15] , then a credit for that earlier tax may be claimed as an offset against the tax payable on the later dealing. 48. Assessable dealings (other than a customs dealing) will only be taxable if the entity which has the dealing is registered or is required to be registered for GST. 49. With the exception of some applications to own use, GST applies to all taxable assessable dealings with wine. The most common assessable dealing is a wholesale sale and for this type of dealing the taxable value is the selling price (exclusive of WET and GST). In this case, GST is calculated on the selling price of the wine including the WET. 50. An assessable dealing may be exempted from WET because the purchaser has grounds for quoting and has made a quote (see paragraphs 177 to 182A and Appendix 1 of this Ruling). The purchaser's Australian Business Number (ABN) is used for quoting. 51. Normally, for retailers (including bottle shops, hotels, restaurants and cafes), WET is included in the price for which they purchase the wine. Most retailers are not entitled to a credit for WET included in the purchase price of the wine. The system is designed so that WET is built into the retailers' cost base and is then effectively passed on in the price of the wine to the end consumer. This does not affect the entitlement of the retailer to claim an input tax credit for GST. 52. Paragraph 6B of this Ruling sets out a schematic diagram showing the basics of how the WET works in relation to the more common assessable dealings with wine. 53. [Omitted.] | Do you need to register for WET?: 54. There is no separate registration requirement under the WET Act. Registration relates to registration under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). 55. You do not have a liability to pay WET on any assessable dealing with wine (other than a customs dealing) unless you are registered or are required to be registered for GST. [16] 56. [Omitted.] | Wholesale sales: 57. The most common assessable dealing is a wholesale sale. You make a wholesale sale where you sell wine to an entity which purchases the wine for the purposes of resale. [17] A wholesale sale of wine is taxable [18] even if the wine has been taxed previously (although there is a credit [19] for the earlier tax). This ensures that tax is imposed on the final wholesale sale. 58. Some examples of the most common wholesale sales are: 59. A sale of wine from stock in a retail store (or retail section of a store) to make up for a temporary shortage of stock of the purchaser is not a wholesale sale if the wine is of a kind that: Example 4 - sale of wine that is not a wholesale sale 60. Braden's Steak House is a restaurant which is experiencing a temporary stock shortage of wine. Braden's Steak House usually purchases their supplies of wine from a wholesaler but on this occasion needs the wine immediately. Braden's Steak House goes to Larry's Liquor Retail House and buys the wine they need. 61. The sale by Larry's Liquor Retail House to Braden's Steak House is not a wholesale sale. | Retail sales: 62. A retail sale [21] is any sale that is not a wholesale sale (see paragraphs 57 to 61 of this Ruling). There are a number of situations where retail sales of wine are assessable dealings. 63. The following retail sales are examples of the most common situations where retail sales of wine are assessable dealings: | Indirect marketing sales: 64. Indirect marketing sales [27] are a type of retail sale that are assessable dealings even though the purchaser of the wine may have borne WET. These arrangements are assessable dealings to ensure that the wine is taxed on the full wholesale value. [28] In accordance with section 5-20, you make an indirect marketing sale [29] if you are not the manufacturer of the wine and the sale occurs in either of the following circumstances: 65. [Omitted.] 66. [Omitted.] 67. [Omitted.] 68. [Omitted.] 69. [Omitted.] 70. [Omitted.] 71. These types of sales usually involve an agency arrangement. Whether or not a retailer is acting as your agent requires an examination of the facts and circumstances in each case. General principles of agency are relevant and, in most cases, relevant documentation about the business relationship (for example a written agency agreement), the description used by the parties and the conduct of the parties will determine whether or not an agency arrangement exists. An agreement under Subdivision 153-B of the GST Act, although on its own may not be conclusive, may be indicative of an agency arrangement between parties. [31A] 72. [Omitted.] 73. [Omitted.] | Royalty-inclusive sales: 74. Royalty-inclusive sales [32] are another category of retail sales that are assessable dealings, even though the purchaser of the wine may have borne WET. Royalties paid before the last assessable dealing with wine will be covered by the special taxable value rules for royalty payments (see paragraph 129 of this Ruling). If the royalty payment is made after that time, then the amount of the royalty will be included in the value of any retail sale. [33] 75. Royalty [34] is a defined term in the WET Act. 76. [Omitted.] 77. [Omitted.] 78. [Omitted.] 79. [Omitted.] | Application to own use: 80. The most common examples of wine being applied to own use are: 81. The definition of application to own use [38] excludes a sale of wine, consigning wine for sale on consignment and anything done with imported wine after importation but before it is locally entered. Application to own use also excludes using the wine as part of the process of manufacture or other treatment or processing of wine or other goods. This means that you will not have a liability for WET where you use wine, which has not previously been taxed, in this way. Examples of wine being used as part of the process of manufacture or other treatment or processing are where it is used for: 82. We consider that wine included as bonus wine with the sale of other wine as part of a contract of sale is not applied to the seller's own use. The bonus wine is sold with the other wine and the price attributable to the bonus wine is accepted as being included in the sale price of the wine. An example of this is where a bonus bottle of wine is included with the sale of a dozen bottles. In this case it is accepted that 13 bottles of wine are sold for what is otherwise the price of 12 bottles. 83. You will have a WET liability for wine that you apply to your own use, if you are registered or are required to be registered for GST purposes, and you: | Royalty-inclusive application to own use: 84. An application to own use of wine may be an assessable dealing even though someone has already borne WET on that particular wine. An example of this is a royalty-inclusive application to own use. [42] The reason for taxing this assessable dealing is to ensure that wine is taxed on the full wholesale value. In this circumstance, there is a credit available for the tax previously borne on the wine by the entity that applied the wine to its own use (the applier). [43] 85. A royalty-inclusive application to own use occurs if the following conditions are met by the applier: | Local entry: 86. The WET Act sets out the situations that are assessable dealings with imported wine. [45] The term used in the WET Act to cover the situation of imported wine is 'local entry'. This applies whether or not a formal customs entry is required. Some of the common situations that amount to a local entry are: | Removal from a customs clearance area: 87. Removal from the customs clearance area of wine purchased by a relevant traveller [46] from an inwards duty-free shop is an assessable dealing. [47] You are a relevant traveller if you are a person (whether passenger or crew member) who has alighted from an international flight. | What value is used to calculate the WET?: 88. WET is calculated by multiplying the taxable value of a taxable dealing by 29%. [48] The discussion below refers to the normal taxable values which apply to arm's length transactions. These normal taxable values may be increased, for example, where you have a transaction with wine that is not at arm's length [49] or to include the value of royalties or containers. [50] | Taxable value of wholesale sales: 89. For a taxable dealing with wine that is a wholesale sale the taxable value is the price for which the wine is sold (excluding WET and GST). [51] Taking into consideration the ordinary legal meaning of 'sale', the extension to the ordinary meaning of sale as specified in section 33-1, and the definition of 'price' in section 33-1, we consider that the phrase 'the price for which the wine is sold' means the total amount that the buyer promises, expressly or tacitly, to pay to get good title to the wine. [52] 90. In the context of the WET Act the total amount that the buyer promises, expressly or tacitly, to pay to get good title to the wine will include both monetary and non-monetary amounts. 91. For the purposes of the WET Act, as a general rule all amounts charged by the seller in relation to the supply of wine up to the point when the property in the wine passes to the buyer, form part of the price for which the wine was sold. Meaning of 'sale' 92. The word 'sale' is not defined in the WET Act except to specify that it includes barter or exchange. [53] 93. The technical legal meaning usually given to the term 'sale' is the transfer by mutual consent of the ownership of a thing from one person to another for a money price. [54] However, in some contexts, as a matter of ordinary non-technical English usage, 'sale' is capable of extending to the transfer of property for any valuable consideration. [55] 94. We consider that the WET Act is one such context in which it is appropriate to adopt the wider, non-technical interpretation of the term 'sale'. The definition of 'sale' in section 33-1 extends the meaning of 'sale' for the purposes of the WET Act to include barter or exchange. Therefore, for the purposes of the WET Act, 'sale' includes the transfer of the ownership of wine for both monetary and non-monetary amounts. 95. All the States and Territories have in place sale of goods legislation which governs the sale of goods. In accordance with State and Territory sale of goods legislation, for a sale to have taken place the property in the goods must be transferred from the seller to the purchaser. 96. In broad terms, a sale of wine occurs for the purposes of the WET Act when ownership is transferred from one person (the seller) to another (the purchaser) for a 'price' [56] . Meaning of 'price' 97. Section 33-1 specifies that the word 'price' is to take the meaning given by section 9-75 of the GST Act, which defines 'price' as the sum of: 98. [Omitted.] 99. [Omitted.] 100. [Omitted.] 101. [Omitted.] 102. [Omitted.] 103. The reference to 'price' refers to 'consideration', which is defined very broadly in section 9-15 of the GST Act to include any payment, act or forbearance, in connection with a supply of anything. Delivery charges 104. The price for which the goods are sold will include delivery charges such as freight, postage or insurance where goods are sold under a contract that provides that the sale price includes delivery. If the payment for delivery for the wine must occur for the purchaser to obtain good title to the wine, then the delivery charges form part of the taxable value. [60] Therefore, where wine is sold under a contract with a sale price that includes delivery, the amount for which the wine is sold will include all the costs incurred up to the point of delivery. 105. However, where delivery is the subject of a separate contract, delivery charges for freight, postage or insurance will not usually form part of the sale price. It will be clear that charges for freight, postage or insurance will not form part of the sale price when: 106. [Omitted.] Example 6 - sale price includes delivery 107. A customer of Vineyard Wholesalers places an order for a dozen cases of wine. Vineyard Wholesalers supplies the wine to the customer's premises for a price of $220 per case. 108. In these circumstances the sale price includes delivery and title in the wine passes at the time the wine is delivered. Therefore, charges for delivery, including freight, postage and insurance will form part of the price for which the wine is sold and will be included in the taxable value of the wine. Example 7 - separate contract for delivery of wine 109. A customer of RedWine Wholesalers places a phone order for two dozen cases of wine. The price of the wine is $180 per carton. The customer can make their own arrangements for the wine to be collected from RedWine Wholesaler's premises. Alternatively, RedWine Wholesalers can arrange for delivery of the wine for an additional charge of $33. The customer agrees to pay the additional $33 charge for RedWine to arrange delivery of the wine. The title in the wine passes to the customer at the time the wine leaves RedWine Wholesaler's premises. 110. In these circumstances the charge for delivery is under a separate contractual arrangement to the sale of the wine. The additional $33 charge will not form part of the price for which the wine was sold and will not be included in the taxable value. Finance charges 111. Some contracts include a finance charge, expressed as a percentage of the price of the wine, for late payment of the amount invoiced and due. Whether finance charges form part of the taxable value of the wine will depend on the terms of the contract entered into between the parties. 112. If the finance charge must be paid to get good title to the wine, it will form part of the price for which the wine was sold and, therefore, be part of the taxable value. On the other hand, if the finance charge operates merely as a deterrent to late payment for the wine, beyond the vendor's usual trading terms, it will not comprise a part of the price for which the wine was sold. Example 8 - deterrent to late payment 113. Wine Wholesalers Pty Ltd sells wine for $200 per case. Wine Wholesalers Pty Ltd's usual trading terms allow 30 days for payment. Title in the wine passes to the customer upon delivery of the wine. If a customer does not pay within the 30 day term, an additional 1.5% surcharge per case applies. This additional surcharge will not form part of the price for which the goods were sold because it is simply a deterrent to late payment for the goods. 114. Some sellers charge their purchasers an additional fee for use of a credit card. In these cases, the taxable value includes the additional fee as that is the amount for which the wine is sold. Example 9 - surcharge for payment by credit card 115. Wine Sellers Pty Ltd offers wine for $240 a case. If purchasers pay by credit card there is a 1% surcharge. John buys 10 cases of wine and pays by credit card. He is charged: $240 x 10 = $2,400 Plus 1% of $2,400 = $24 Taxable value = $2,424 116. Some sellers of wine offer an option of time to pay and charge a fee if the buyer utilises this option. In these circumstances the amount that the purchaser is bound to pay for the wine includes the additional fee and, therefore, it is included in the taxable value of the wine. Example 10 - optional time to pay 117. GoodWine Wholesalers sells wine for $199 per case. Customers have the option of paying cash on delivery or deferring payment for 30 days. In both cases title in the wine passes on delivery of the wine. If a customer chooses to defer payment an additional 2% surcharge per case applies. Where a customer opts for deferred payment, the additional 2% surcharge will form part of the sale price for which the wine is sold as it is included in the amount that the customer has agreed to pay to obtain good title to the wine. Trade incentives 118. Trade incentives are allowed by suppliers to their customers in many different circumstances. Some of these incentives affect the price for which the wine is sold and hence the taxable value on which WET is payable, while others do not. Examples of trade incentive payments are trade discounts, settlement discounts, volume rebates, promotional rebates, co-operative advertising allowances and deferred credits. 119. In order to reduce the taxable value, the trade incentive must relate to the sale and the selling price of the wine, so as to bring about a reduction in that price. Factors relevant to determining whether or not an incentive reduces the sale price of the wine include: 120. Examples of incentives which reduce the sale price of wine include: 121. However, incentives that are provided to subsidise, compensate, reimburse, or reward a customer for carrying out activities or performing services for the supplier do not reduce the selling price of the wine. This will be the case even if they are based on volume or value and however they may be described. 121A. Payments provided by the purchaser for the specific benefit of the producer's product or brand do not reduce the selling price of wine. Such services include positioning wine in a prime position in a bottle shop, so it is marketed in a way that is better than the marketing of other wines in the shop or advertising the wine as 'wine of the month' in a retailer's sales catalogue. 122. Examples of payments which do not usually reduce the sale price of wine also include: Commission agents 123. Some sellers use commission agents to facilitate the sale of their wine. [61A] The commission agent may deduct a fee from the proceeds of sale. However, this fee does not reduce the price for which the wine was sold and cannot be deducted from the taxable value of the wine. Example 11 - commission fee 124. Wine seller XYZ sells wine by using a commission agent who charges 5% of the selling price as fee for the service. 125. The agent arranges a wholesale sale of a carton of wine for $100. The agent retains $5 and forwards $95 to XYZ. The price for which the wine was sold is $100. Auction fees 126. Where wine is sold by auction there are generally fees charged by the auctioneer. The treatment of these fees is as follows: Container deposit 127. Some States have a container deposit scheme whereby certain beverage containers are subject to a scheme to encourage the recycling of the containers. Effectively the beverage suppliers include a component in their price to cover the deposit which is refunded to consumers who return the container to specified collection points. 128. In relation to wine that is subject to a container deposit scheme, the deposit component forms part of the price that has to be paid to attain good title to the wine and, therefore, forms part of the taxable value. | Additional amounts included in taxable value: 129. Sometimes, not all the costs associated with wine are reflected in the taxable value. Where these costs are not already included, the WET Act requires amounts to be specifically added to the taxable value. Royalty payments (see paragraph 74 of this Ruling) associated with the wine and the value of the container in which the wine is sold are examples of costs which must be added to the taxable value of the wine where they have not already been included. [62] Example 12 - value of a container 130. Specialty Gifts Pty Ltd sells wine by wholesale. They sell wine at $600 a dozen. They will also sell the wine for $60 a bottle and for an additional $60 pack it in individual handmade wooden display cases. 131. The taxable value of the wine sold in the display cases is $120 a bottle. | Apportionment of amounts where wine and other goods are sold together: 132. If you package and sell wine and other goods together for one inclusive price, then the other goods will be treated separately for the purpose of calculating the amount for which the wine was sold. The amount for which the wine was sold is the price (excluding WET and GST) for which the wine could reasonably have been expected to have sold for separately. [63] 133. Sometimes where you package wine with other goods and sell them together for one inclusive price, that sale price is less than the sum of the individual prices of the goods. Effectively, the individual prices of the goods are discounted by being sold as a package in comparison to what the prices would have been had the items been sold separately. In the absence of evidence to show a different apportionment would be more appropriate, the discount allowed for the package should be applied on a pro rata basis to establish the prices of the individual items. Example 13 - apportionment of amounts where wine and other goods are sold together 134. Good Wines Winery Ltd sells wine with a wholesale price of $30 (excluding WET and GST), a key ring with a wholesale price of $15 (excluding GST) and a pen with a wholesale price of $5 (excluding GST) by wholesale in a package for $40 (excluding WET and GST). The total of the individual wholesale prices is $50. This means that Good Wines Winery Ltd gives a discount from the sum of the individual wholesale prices of 20%. This discount is applied to the normal wine price to produce a taxable value of $24 for calculation of the WET on the wholesale sale of the package by Good Wines Winery Ltd. 135. The WET and GST payable by Good Wines Winery Ltd is calculated as follows: Example 14 - apportionment of amounts where wine and other goods are sold together 136. The Fairly Good Wine Distribution Company sells a package of a bottle of wine, an ice bucket and a key ring for a wholesale price of $54 (excluding WET and GST). The Fairly Good Wine Distribution Company also sells this wine by wholesale and does not sell the ice bucket or key ring by wholesale. They purchase the wine for $25, the ice bucket for $10 and the key ring for $1. Apportioning the amounts in the ratio of the purchasing price results in a taxable value of the wine of: 137. As discussed at paragraphs 104 and 105 of this Ruling, the price for which you sell wine will include delivery charges where it is sold under a contract that includes delivery. In these circumstances, when calculating the taxable value of the wine, it is not appropriate for you to apportion the price between an amount for the wine and an amount for the delivery. The delivery is an integral and ancillary part of the sale of the wine and is not separately identifiable from the sale of the wine. Similarly, a price that comprises a finance charge that is required to be paid in order for your customer to obtain good title to the wine from you (see paragraphs 111 to 117 of this Ruling) should not be apportioned between an amount applicable to the wine and an amount attributable to the finance charge for the purposes of calculating the taxable value of the wine. | Other taxable dealings including retail sales and applications to own use: 138. For most other taxable dealings, the taxable value is the notional wholesale selling price. [64] The discussion at paragraphs 89 to 129 of this Ruling, relating to charges and discounts that affect the price for the purposes of calculating the taxable value of wholesale sales is also applicable for the purposes when calculating the notional wholesale selling price. Alternative methods for determining the notional wholesale selling price are discussed at paragraphs 142 to 151 of this Ruling. 139. In the wine industry, retail sales by a wine manufacturer are a regular occurrence. Sales by cellar door and by mail order are the most common retail sales. Wine is also regularly applied to the manufacturer's own use when tastings are provided at the cellar door or promotional work is undertaken. [65] The taxable value specified in the WET Act for these dealings with wine is the notional wholesale selling price. [66] 140. The notional wholesale selling price is also used to determine the taxable value for retail sales which are indirect marketing sales [67] and retail sales of wine which is placed in containers at a time after WET became payable on the wine by a person other than the seller. [68] 141. Where the wine has been purchased free of WET under quote and applied to own use the taxable value is the purchase price (excluding GST). [69] However, where the wine is imported under quote by the applier, the taxable value is the GST importation value. [70] | Notional wholesale selling price for grape wine: 142. There are two methods available for you to work out the notional wholesale selling price for a taxable dealing that is either a retail sale (including an indirect marketing sale and a retail sale of wine that is placed in containers at a time after WET became payable on the wine by a person other than the seller) of grape wine or an application to own use which is connected with retail sales of grape wine. [71] The half retail price method is used unless the average wholesale price method is chosen. [72] The half retail price method 143. Under this method, the notional wholesale selling price: Example 15 - WET and GST payable under half retail price method 144. Good Wines Winery Ltd sells a bottle of grape wine at the cellar door to a retail customer for $22 (including WET and GST). The winery uses the half retail price method to calculate the notional wholesale selling price for its retail sales. 145. WET payable by the winery is: (50% x $22) x 29% = $3.19 GST payable by the winery is: $22.00 / 11 = $2.00 The average wholesale price method 146. You can only choose to use this method if, during the tax period in respect of which the liability to pay WET arises, at least 10% by value of all sales of grape wine that: are wholesale sales. [75] 147. You work out the average wholesale price using the weighted average of the prices (excluding WET and GST) for you wholesale sales (including exports) of grape wine that fall into the above category for the tax period. [76] When calculating the average wholesale price, you are able to take into account any discounts, incentives, rebates and other payments that reduce the price for which your wine is sold. Example 16 - WET and GST payable under average wholesale price method 148. Good Wines Winery Ltd sells 1 dozen bottles of grape wine at the cellar door to a retail customer for $190 (including WET and GST). During the same tax period more than 10% of the winery's sales of wine of the same vintage and produced from the same grape varieties are wholesale sales. The winery chooses to use the average wholesale price method to calculate the notional wholesale selling price for its retail sales. 149. Good Wines Winery Ltd calculates that during the tax period 70% of wholesale sales of the same wine are at $80 per dozen (excluding WET and GST), and the remaining 30% are at $90 per dozen (excluding WET and GST). On this basis, the weighted average of the wholesale prices for wholesale sales made by the winery during the tax period is: (70% x $80) + (30% x $90) = $83 per dozen 150. The WET payable by the winery under the average wholesale price method on the cellar door retail sale of 1 dozen bottles is: 29% x $83 = $24.07 151. The GST payable on the cellar door sale is: $190 / 11 = $17.27 | Grape wine sold by the glass: 152. If you are a wine producer who sells grape wine by the glass, you can calculate the taxable value of the wine: | Notional wholesale selling price for wine other than grape wine: 153. You must use the half retail price method as the notional wholesale selling price if you have a taxable dealing with wine that is not grape wine, and the dealing is either a retail sale, or an application to own use connected with retail sales. [77] | Wine other than grape wine sold by the glass: 154. If you are a producer of wine that is not grape wine, and you sell that wine by the glass, you must calculate WET using a taxable value of 50% of the price (including WET and GST) of the glass of wine. | Notional wholesale selling price for other dealings: 155. The notional wholesale selling price for a taxable dealing with wine that is neither a retail sale of wine, nor an application to own use connected with retail sales of wine, is the price (excluding WET and GST) for which the wine could reasonably have been expected to be sold by wholesale under an arm's length transaction. [78] | Imported wine: 156. An assessable dealing with wine which is taxable at the customs barrier, that is a local entry, has a taxable value equal to the GST importation value of the wine. [79] The GST importation value is the customs value plus the costs of transport, insurance and duty. [80] | Royalty-inclusive sales and royalty-inclusive applications to own use: 157. The taxable value for royalty-inclusive sales and royalty-inclusive applications to own use is the amount that would be the price (excluding WET and GST) for which the entity could reasonably have been expected to purchase the wine by wholesale under an arm's length transaction if the manufacturer or importer of the wine had incurred the royalty costs. [81] | Non-arm's length transactions (including staff sales, shareholder sales and sales to grape growers): 158. The WET liability on a non-arm's length transaction must be at least equal to the amount it would have been if the transaction had been an arm's length equivalent transaction. [82] 159. Where you make sales to staff, shareholders and grape growers at discounted prices, these sales are considered to be non-arm's length sales. Accordingly, you must pay WET on these sales based on prices that would be used in a similar arm's length transaction. For example, you may charge your staff $100 (including WET and GST) per dozen for a quantity of wine while the normal retail price for the same wine sold in the same quantity is $150 (including WET and GST) per dozen. WET on the staff sale should be calculated by reference to the normal retail price of $150 per dozen (WET payable is $21.75 per dozen using the half retail price method). 160. We consider that sales to related companies or other related entities are also non-arm's length transactions. | Do you need to specify the amount of WET on invoices?: 161. Where you sell wine by wholesale for a price that includes WET, you must specify the amount of the WET on the invoice you give to the purchaser. [83] The WET can be specified as a separate amount for each item of taxable wine on the invoice on a line by line basis or as a total amount for all the taxable wine on the invoice. 162. You do not have to specify the amount of WET where you sell the wine by retail, that is, to the end user, even if WET is payable on that transaction. | What exemptions can apply?: 163. In some circumstances an assessable dealing with wine is exempt from WET. There are five categories of exemption: 164. If an exemption applies to an assessable dealing, then that dealing is not taxable and is therefore not subject to WET. [91] | Are sales to overseas travellers exempt?: GST-free and WET-free exports of wine by overseas travellers 165. Sales to overseas travellers who take delivery of the wine in Australia are subject to WET and GST [92] unless all of the following conditions are met: Refunds under the Tourist Refund Scheme 166. If you are an overseas traveller, you may be entitled to a refund of the WET and GST under the Tourist Refund Scheme at the point of departure from Australia if you still have the wine with you. [94] The Tourist Refund Scheme is administered by the Department of Immigration and Border Protection Service (DIBP). 167. If you are an overseas traveller, you may be eligible for a refund under the Tourist Refund Scheme if you: 168. A refund under the Tourist Refund Scheme is not available if the wine has been partly consumed. [100] A refund is also not available if you are leaving Australia in the course of your employment as either the person in charge or command of an aircraft or ship, or as a member of the crew of an aircraft or ship. [101] 168A. In addition to being able to claim a refund of WET through the Tourist Refund Scheme for accompanied baggage, if you are a resident of an Australian external Territory, you can purchase wine and claim a refund of WET when you export the wine back to their home territory as unaccompanied baggage, provided you are not registered or required to be registered for GST at the time the wine is purchased. [102A] 168B. An external Territory is Norfolk Island, Christmas Island or Cocos (Keeling) Islands. You are a resident of an Australian external territory if you are an individual: 168C. If you are a resident of an Australian external Territory, you may be eligible for a refund under the Tourist Refund Scheme for wine exported as unaccompanied baggage if you: 169. The amount of WET to be refunded under the Tourist Refund Scheme is calculated as 29% of half the purchase price of the wine (including WET and GST). [102] For example, if wine is purchased by the overseas traveller for $320 including WET and GST the amount of WET to be refunded is calculated as follows: 29% x ($320 / 2) = $46.40 Sales from duty-free stores 170. If you are an overseas traveller, you can purchase wine from a duty-free store free of WET and GST under the sealed bag system. [103] | Is an export subject to WET where you export the wine on behalf of a purchaser?: 171. Where you export wine on behalf of a purchaser (including overseas travellers) and you do not reimport the wine, exemption from WET and GST applies provided you export the wine within 60 days [104] after the earlier of: 172. Where the consideration is provided in instalments, exemption from WET and GST applies provided you do not re-import the wine and you export the wine within 60 days [106] after the earlier of: 173. You should retain evidence of the export in your records to support treating the wine as WET exempt. | What is quoting?: 174. Quoting is a mechanism to relieve or defer WET on wine to a later assessable dealing or to give effect to exemption from WET for a particular supply of wine. [108] 175. If a quote is made in respect of an assessable dealing, then that dealing is exempt from WET. A quote for a sale must be made at or before the time of the sale, and for a customs dealing at or before the time of the dealing. In each case the quote is only effective if made in the form approved by the Commissioner as set out in Appendix 1 of this Ruling. 176. Although quoting an ABN enables wine to be supplied without WET being payable, the supply may still be subject to GST. | Grounds for quoting: 177. There are four standard grounds for quoting an ABN. You have a quoting ground if, at the time of quoting, you intend to: However, you are not entitled to quote unless you are registered for GST. [110] 178. You have no grounds for quoting if you purchase or import the wine with the intention of applying the wine to your own use. Application to own use does not include using the wine as a material in manufacture or other treatment or processing of wine or other goods. If you purchase the wine for these purposes it can still be purchased under quote. [111] 179. You also have no grounds for quoting if you intend to place the wine in containers and sell it by retail, unless you are mainly a wholesaler. 180. You are mainly a wholesaler at the time of quoting only if: [112] 181. For the purpose of determining whether you are mainly a wholesaler, the value of a sale of wine is the price for which the wine is sold (including WET and GST). [113] 182. You may also quote in special circumstances that fall outside the quoting grounds if you have received authorisation from the Commissioner. [114] 182A. If you purchased wine for a price which included WET, you cannot on-sell the wine under quote. Any quote given to you for WET-paid wine will be ineffective and you will be liable for WET on the sale of the wine. [114A] However, where you have a subsequent dealing with the wine for a price that includes WET, you may be able to claim a WET credit for the WET you bore when you purchased the wine. [114B] | Form of quoting: 183. A quotation of an ABN must be made in writing, in the approved form, at or before the time of the dealing. [115] The quotation can be made on the order for the wine, or any other document that contains definite identification of the wine that is the subject of the quotation and which is kept by the supplier, for example, delivery slip, acknowledgment of receipt, duplicate invoice and so on. 184. From 1 July 2018 (and for 2018 vintage wine, from 1 January 2018) [116] , where you purchase wine from a producer, you must state in the quotation whether you intend to have a taxable dealing with the wine. That is, you must indicate whether: 184A. Where you provide a quote to an entity that is not the producer of the wine, there is no requirement to state whether or not you intend to have a taxable dealing. 184B. Where you state in the quote that you will have a taxable dealing with the wine you purchase, you will be liable to pay WET on your subsequent dealing, whether or not it would be otherwise taxable. This is because no exemption or exclusion from WET applies for wine if you state in the quote that you will have a taxable dealing with the wine, and you: Example 17 - wine subsequently sold under quote - exemption does not apply 184C. Dan's Dynamic Distributors purchases wine from the Howling Fog Winery. In the quote, Dan indicates an intention to have a taxable dealing with the wine. 184D. A week later, Dan's Dynamic Distributors receives a purchase order from Jose's Wholesalers to purchase the Howling Fog's wine. Jose's provides a quote to Dan's and Dan's sells the wine free of WET for $350 (exclusive of GST). 184E. As Dan's had indicated to the Howling Fog that it would have a taxable dealing with the wine, Dan's is liable to remit WET on the sale of the wine on its business activity statement (BAS) as it is not covered by the exemption for quoting in section 7-10. [116B] Dan's must include the amount of $101.50 at label 1C (29% of $350) on its BAS. 184F. As Dan's will have a WET liability when it sells the wine to Jose's, Dan may choose not to accept the quote from Jose's and sell the wine to Jose's for a price that includes WET. 185. [Omitted.] 186. If you are importing wine and you are both entitled and wishing to obtain it free of WET under quote, you must quote your ABN to DHA. You can authorise your customs broker to quote your ABN on your behalf. 187. If you are a purchaser and you are permitted to quote, you can quote on each purchase or, where appropriate, give a periodic quote to each supplier to cover your purchases of wine for periods up to one year. [117] 188. There is no need to ask for approval from the Commissioner before using a periodic quotation. Purchasers and suppliers can agree on any period, not exceeding one year that best suits their needs. [118] 189. A periodic quotation of an ABN can be accepted by any supplier. 190. [Omitted.] 191. If you have given your supplier a periodic quotation and you make a purchase of wine from the supplier during the period covered by the quote in respect of which you are not entitled to quote, you must notify the supplier that you are not quoting for that purchase at or before the time of the purchase. [119] Failure to do so is an offence. [120] 192. If you have given a producer a periodic quotation which indicates you intend to make a taxable dealing of the wine, and for a particular purchase you do not intend on making a taxable dealing, you must notify the producer of your intention. Provided it is in the approved form (see Appendix 1 of this Ruling), you can provide the notification on any document (for example a purchase order) provided to the producer at or before the time of the sale. Failure to do so will give rise to a WET liability for you on your subsequent dealing, as no exemption will apply. [121] 192A. If you have given a producer a periodic quotation which indicates that you do not intend to make a taxable supply of the wine, and for a particular purchase during the period covered by the periodic quote you do intend making a taxable supply of the wine, you can notify the producer of your intention. Provided it is in the approved form (see Appendix 1 of this Ruling) and is made at or before the time of the purchase, the notification can be made on any document (for example a purchase order) provided by you to the producer. 193. The notification in each of the cases above should be in the form shown in Appendix 1 of this Ruling. 193A. We acknowledge that there may be times where you purchase wine from a producer under quote and you may not know whether the wine will, or will not, be the subject of a subsequent taxable dealing. Your quote must indicate your intention at the time of making your quote. As explained in paragraph 175 of this Ruling, if your quote states an intention to make a taxable dealing, and you subsequently do not have a taxable dealing, you will nonetheless be liable to WET on that subsequent dealing. 193B. Where you do not deal with the wine you have purchased in accordance with the statement you made in your quote to the producer, there is no mechanism for you to retrospectively amend your quotation. | Quoting by telephone, fax and electronic orders: 194. The Commissioner will accept a two-stage quoting process when wine is ordered and exemption is claimed over the telephone. This process consists firstly of an oral reference to the ABN when ordering the wine, followed by the written quotation within a reasonable time. 195. In practice, when you are purchasing wine, this will allow you to claim exemption over the telephone, and provide the signed written quotation when paying the account. A single written statement that the wine was bought under quotation can cover all wine quoted for during the whole billing period, either by listing the invoice numbers on the quotation or by referring to the statement which includes the invoice numbers. 196. Where you order wine by facsimile, the full form of quotation should be used. 197. Where you purchase wine from a particular supplier by means of electronic data interchange, (for example, email) a quote can be sent electronically, providing that: | Who can sign the quotation?: 198. Quotations of an ABN by a purchasing entity should be made by a person authorised to act for the entity. Persons authorised must have enough knowledge of the business so that they can speak with authority for the proprietor of the business about how the wine being acquired free of WET will be used. It is not necessary to advise the Commissioner who is authorised to sign the quotation but a record must be kept. | Situations where the purchaser is entitled to quote: 199. The following are examples of situations where you are entitled to quote if you are purchasing wine (in all cases it is assumed that you are registered for GST and that if you are quoting to the producer of the wine, you indicate your intention as to whether you will make a taxable dealing with the wine, as explained by paragraph 184 of this Ruling). [122] 199A. Even if you have an entitlement to quote, if the supplier to whom you provided your quote purchased the wine for a price that included WET, your quote will be ineffective to exempt the supplier's sale to you from WET and the supplier cannot accept your quote. In this situation, the supplier will be liable for WET on the sale to you. However, you may be entitled to a credit for the WET where you have a further taxable dealing with the wine. [125A] | WET credits: 199B. There are five broad grounds for WET credits available under the WET Act: 199C. Examples of common situations where you may be entitled to claim a WET credit include: | Agreement with Commissioner on amount of credit: 199D. Section 17-40 provides that the Commissioner may enter into an agreement with you regarding the manner of calculating and claiming the WET credits to which you are entitled. This allows for methods of calculating the amount of credit where you are not able to or would have difficulty in determining the amount of credit. It does not allow for credits in circumstances other than those listed in the WET Credit Table in section 17-5. 199E. We are aware of the following scenario where an entity may be unable to establish the amount of credit available. An entity in one of these situations can utilise the method stated. Alternatively, they may seek to enter into an agreement with the Commissioner.


Appendix: 199G. The approved quoting forms as referred to in paragraphs 183 to 197 of this Ruling are provided. | A) One-off quote: A quotation of an ABN should be in the following form: The entity named below hereby quotes Australian Business Number (insert number) _________________________________________________ The entity hereby notifies you that it: ( ) intends to have a taxable dealing with the wine* ( ) intends to* * If the entity is purchasing the wine from a wine producer it must indicate which of the above is applicable to it by placing a cross in the relevant box. Only one box should be completed Name of entity to whom quote is made ________________________________________________________ Australian Business Number of entity to whom the quote is made ________________________________________________________ Name of entity quoting ________________________________________________________ Name of individual authorised to quote ________________________________________________________ Signature of individual authorised to quote ________________________________________________________ Date ________________________________________________________ | B) Periodic quote: A periodic quotation of an ABN should be in the following form: The entity named below hereby quotes Australian Business Number (insert number) _____________________ in respect of all wine purchased during the period ____________ to ____________ inclusive, except wine in respect of which a separate one-off quotation has been provided, and wine in respect of which the entity notifies you to the contrary at or before the time of the relevant assessable dealing with that wine. ( ) The entity declares that at the time of making this periodic quote it intends to have a taxable dealing with all the wine it purchases, however, it undertakes to notify you at or before the time of the relevant assessable dealing if this intention changes for a particular purchase.* ( ) The entity declares that at the time of making this periodic quote it intends to: for all the wine it purchases, however, it undertakes to notify you at or before the time of the relevant assessable dealing if this intention changes for a particular purchase.* | *If the entity is purchasing the wine from a wine producer it must indicate which of the above is applicable to it by placing a cross in the relevant box. Only one box should be completed: Name of entity to whom quote is made ____________________________________________________ Australian Business Number of entity to whom quote is made ____________________________________________________ Name of entity quoting ____________________________________________________ Name of individual authorised to quote ____________________________________________________ Signature of individual authorised to quote ____________________________________________________ Date ____________________________________________________ Note: The maximum period that can be covered by a periodic quotation is one year. | C) Not entitled to quote for a purchase covered by periodic quote: Where an entity has a periodic quotation in place but it is not entitled to quote on a particular transaction it should provide the supplier with a notification in the following form: The entity named below hereby notifies you that it is not quoting for the purchase of the following wine: Description of the wine _________________________________________________ Date of transaction _________________________________________________ Australian Business Number of entity to whom periodic quote was made _________________________________________________ Name of entity which made the periodic quote _________________________________________________ Australian Business Number of entity which made the periodic quote _________________________________________________ Name of individual authorised to make this declaration _________________________________________________ Signature of individual authorised to make this declaration _________________________________________________ Date _________________________________________________ | D) Quotation to Department of Home Affairs: A quotation to the Department of Home Affairs should be in the following form: Australian Business Number (insert number)_________________ is hereby quoted in relation to the importation of wine as described above at line number(s) ____________________________________________________ (insert relevant line numbers)


Wine equalisation tax: the operation of the wine equalisation tax system: This Ruling contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019. This Ruling continues to have effect in relation to the remade Regulations. | Paragraph 32 of TR 2006/10 provides further guidance on the status and binding effect of public rulings where the law has been repealed and rewritten. | A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this Ruling is available. | Summary - what this Ruling is about | NOT LEGALLY BINDING SECTION | Appendix 1 - Approved quoting forms | Appendix 2 - Compliance guide | Appendix 3 - Detailed contents list | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this Ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this Ruling if it turns out that it does not correctly state how the relevant provision applies to you. | [Note: This is a consolidated version of this document. Refer to the Legal Database (http://www.ato.gov.au/law) to check its currency and to view the details of all changes.] | How does the WET work?: 6. The broad aim of the WET Act is to impose WET on dealings with wine in Australia. WET is applied to both Australian produced wine and imported wine. Dealings which attract WET are called assessable dealings and can include selling wine, using wine, or making a local entry of imported wine at the customs barrier. | 6A. WET is normally a once only tax designed to fall on the last wholesale sale and is calculated at the rate of 29% of the taxable value of the dealing. To ensure that WET ultimately falls on the last wholesale sale of wine consumed in Australia, WET incorporates a system of quoting and credits. | 6B. The path for determining liability for WET is set out in the diagram below: | Previous rulings: 7. The operation of the wine equalisation tax system was previously addressed in WETR 2004/1. WETR 2004/1 has been withdrawn with effect from the date of issue of this Ruling. | 7A. This Ruling reflects changes made to the WET Act by Treasury Laws Amendment (2017 Measures No. 4) Act 2017. | GST (10% ? [$40 + $6.96]) | Total price (including WET and GST) | Ratio between purchase and selling prices | 29% of half the purchase price of the wine (including WET and GST) less any WET included in the price that has been refunded or credited to the entity. | Date of effect: 199F. This Ruling applies both before and after its date of issue. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10 Public Rulings). | Commissioner of Taxation 24 June 2009 | Appendix 2 - Compliance guide: This Appendix contains information to assist taxpayers in complying with relevant tax laws. Provided you follow the advice in this appendix in good faith and consistently with the ruling section, the Commissioner will administer the law in accordance with this guide. | How do you pay the WET?: 200. Where you have a taxable dealing with wine (other than the local entry of imported wine), your net amount [126] for a tax period includes the sum of all amounts of WET payable by you that are attributable to that tax period less the sum of all amounts of WET credits to which you are entitled that arise during that tax period. [126A] This is done by entering the total amount of WET payable against Label 1C on your activity statement. The total of any WET credits is entered against Label 1D on your activity statement. | 201. If you import wine you are required to pay the WET to DHA at the time of the customs dealing unless you quote your ABN. This is so even where you have received approval from the Commissioner to defer the payment of GST on taxable importations. | When do you pay the WET?: 202. For a taxable dealing with wine that is a supply for GST purposes, the WET payable is attributable to the same tax period or tax periods as the GST payable on the taxable supply. [127] However, if the time of the dealing occurs after the end of that tax period or periods, the WET payable may be treated as being attributable to the tax period in which the time of the dealing occurs. [128] | 203. In the case of assessable dealings which are types of sales, the Assessable Dealings Table in section 5-5 specifies that the time of the dealing is the 'time of sale'. As discussed at paragraphs 92 to 96 of this Ruling a sale takes place when property passes from the seller to the purchaser. For example, a contract for a wholesale sale of wine may be subject to a Romalpa or retention of title clause whereby the title in the wine passes when payment is made. If you sell wine under a contract containing a Romalpa clause, and you do not account for GST on a cash basis, the GST would commonly be attributed to the tax period in which the you issue an invoice. However, the sale, which is the taxable dealing, does not occur until a later period and the WET is attributable to the tax period in which the sale occurs. | 204. Furthermore, in circumstances where an assessable dealing consists of a sale, if the purchaser uses the wine after the time when the contract is made but before the time when title passes to the purchaser, section 5-10 specifies that it is the time the purchaser uses the wine that is taken to be the time of the sale. In these circumstances the WET is attributable to the tax period when the use occurs. | 205. The term 'use' is not defined in the WET Act. In addition to the on-selling of wine by a purchaser, we consider that 'use' for the purposes of section 5-10 would include: | 206. For a taxable dealing that is not a supply for GST purposes (for example, an application to own use), the WET payable is attributable to the tax period in which the time of the dealing occurs. | How do you claim WET credits?: 211. Where you are registered for GST, you can claim WET credits as a reduction in your net amounts due under the GST Act. [145] This is done by entering the total amount of WET credits being claimed against Label 1D on your business activity statement. There is no monetary limit for credits claimed as reductions in a registered entity's GST liability. | 212. If you are not registered or required to be registered for GST, you can claim credits as a direct refund from the Commissioner. [146] Direct refunds are not available for amounts totalling less than A$200. [147] However, individual claims may be aggregated to reach the A$200 minimum amount. | 214. If it would otherwise be greater than the arm's length amount, the WET credit on a non-arm's length transaction must be reduced to the amount it would have been if the transaction had been an arm's length transaction. [149] | 215. If you are registered or required to be registered for GST, claims for WET credits are subject to a time limit, generally 4 years from the date you lodged your return for the tax period. | 216. If you are not registered and not required to be registered for GST, claims for WET credits must be made within 4 years of the time when the WET credit arises. [151] | What records do you need to keep and for how long do you need to keep them?: 217. You must keep records of all transactions that relate to the dealing or credit claim for the longest of: | 218. The records must be in English or readily accessible and convertible into English. The WET liability must also be able to be readily determined from your records. [153] | Are there anti-avoidance provisions for wine tax?: 219. Division 165 of the GST Act applies in relation to WET in the same way that it applies to GST. | Appendix 3 - Detailed contents list: 221. The following is a detailed contents list for this Ruling: | Do you need to register for wine tax? | What are assessable dealings? | What value is used to calculate WET? | Is an export subject to WET where you export the wine on behalf of the purchaser? | How do you claim WET credits? | What records do you need to keep and for how long do you need to keep them? | Are there anti-avoidance provisions for wine tax? | Footnotes: Previously issued in draft format as WETR 2008/D1


Related rulings: GSTR 2000/37 GSTR 2002/6 TR 2006/10 WETR 2004/1 WETR 2009/2
Legislative references: ANTS(WET)A 1999 ANTS(WET)A 1999 5-5 ANTS(WET)A 1999 5-5(2) ANTS(WET)A 1999 5-5(2)(c) ANTS(WET)A 1999 5-5(3) ANTS(WET)A 1999 5-10 ANTS(WET)A 1999 5-15 ANTS(WET)A 1999 5-20 ANTS(WET)A 1999 5-25 ANTS(WET)A 1999 5-30 ANTS(WET)A 1999 5-50 ANTS(WET)A 1999 5-50(2) ANTS(WET)A 1999 Div 7 ANTS(WET)A 1999 7-5 ANTS(WET)A 1999 7-10 ANTS(WET)A 1999 7-15 ANTS(WET)A 1999 7-20 ANTS(WET)A 1999 7-25 ANTS(WET)A 1999 9-25 ANTS(WET)A 1999 9-25(2) ANTS(WET)A 1999 9-25(3) ANTS(WET)A 1999 9-30 ANTS(WET)A 1999 9-35 ANTS(WET)A 1999 9-40 ANTS(WET)A 1999 9-45 ANTS(WET)A 1999 9-65 ANTS(WET)A 1999 9-70 ANTS(WET)A 1999 13-5 ANTS(WET)A 1999 13-5(1) ANTS(WET)A 1999 13-5(1)(d) ANTS(WET)A 1999 13-5(2) ANTS(WET)A 1999 13-5(3) ANTS(WET)A 1999 13-10 ANTS(WET)A 1999 13-15 ANTS(WET)A 1999 13-15(1) ANTS(WET)A 1999 13-15(3) ANTS(WET)A 1999 13-15(4) ANTS(WET)A 1999 13-20 ANTS(WET)A 1999 13-32 ANTS(WET)A 1999 17-5 ANTS(WET)A 1999 17-10(1) ANTS(WET)A 1999 17-10(2) ANTS(WET)A 1999 17-10(3) ANTS(WET)A 1999 17-15 ANTS(WET)A 1999 17-40 ANTS(WET)A 1999 21-5 ANTS(WET)A 1999 21-10 ANTS(WET)A 1999 21-15 ANTS(WET)A 1999 23-10 ANTS(WET)A 1999 25-5 ANTS(WET)A 1999 25-5(1)(a) ANTS(WET)A 1999 25-5(1)(b) ANTS(WET)A 1999 25-5(1A) ANTS(WET)A 1999 25-5(1A)(a) ANTS(WET)A 1999 25-5(1A)(b) ANTS(WET)A 1999 25-5(1A)(c) ANTS(WET)A 1999 27-5 ANTS(WET)A 1999 27-10 ANTS(WET)A 1999 27-15(1) ANTS(WET)A 1999 Div 31 ANTS(WET)A 1999 31-1 ANTS(WET)A 1999 31-2 ANTS(WET)A 1999 31-3 ANTS(WET)A 1999 31-3(b)(ii) ANTS(WET)A 1999 31-4 ANTS(WET)A 1999 31-5 ANTS(WET)A 1999 31-6 ANTS(WET)A 1999 31-7 ANTS(WET)A 1999 31-15 ANTS(WET)A 1999 33-1 ANTS(WET)R 2000 ANTS(WET)R 2000 Div 25 ANTS(WET)R 2000 25-5.02(1) ANTS(WET)R 2000 25-5.02(1)(b) ANTS(WET)R 2000 25-5.02(2) ANTS(WET)R 2000 25-5.03 ANTS(WET)R 2000 31-2.01 ANTS(WET)R 2000 31-3.01 ANTS(WET)R 2000 31 3.01(a) ANTS(WET)R 2000 31 3.01(b) ANTS(WET)R 2000 31 3.01(c) ANTS(WET)R 2000 31-3.01(2) ANTS(WET)R 2000 31-3.01(3) ANTS(WET)R 2000 31-3.01(3)(a) ANTS(WET)R 2000 31-3.01(3)(b) ANTS(WET)R 2000 31-3.01(3)(c) ANTS(WET)R 2000 31-4.01 ANTS(WET)R 2000 31-6.01 ANTS(GST)A 1999 ANTS(GST)A 1999 9-15 ANTS(GST)A 1999 9-75 ANTS(GST)A 1999 13-20 ANTS(GST)A 1999 Div 17 ANTS(GST)A 1999 Subdiv 38-D ANTS(GST)A 1999 38-185(1) ANTS(GST)A 1999 38-185(3)(f) ANTS(GST)A 1999 Div 153B ANTS(GST)A 1999 Subdiv 153-B ANTS(GST)A 1999 Div 165 ANTS(GST)A 1999 168-5(1A) ANTS(GST)A 1999 168-5(1A)(c) ANTS(GST)A 1999 168-5(1A)(d) ANTS(GST)A 1999 195-1 ANTS(GST)R 1999 38-185.01 ANTS(GST)R 1999 Div 168 ANTS(GST)R 1999 168-5.04 ANTS(GST)R 1999 168-5.05 ANTS(GST)R 1999 168-5.06 ANTS(GST)R 1999 168-5.07 ANTS(GST)R 1999 168-5.09 ANTS(GST)R 1999 168-5.10B ANTS(GST)R 1999 168-5.10C(1)(c) ANTS(GST)R 1999 Sch 5 TAA 1953 TAA 1953 Sch 1 105-55(1) TAA 1953 Sch 1 Subdiv 155-B TAA 1953 Sch 1 155-35 TAA 1953 Sch 1 382-5 Customs Act 1901 96B Customs Act 1901 113 Customs Tariff Act 1995 Sch 4 Treasury Laws Amendment (2017 Measures No.4) Act 2017 19(2)
Case references: Bristol-Myers Company Pty Ltd v. Commissioner Of Taxation (1990) 23 FCR 126 90 ATC 4553 21 ATR 417
Other references: Australia New Zealand Food Standards Code Explanatory Memorandum to the A New Tax System (Wine Equalisation Tax) Bill 1999 Explanatory Statement to Select Legislative Instrument 2009 No.234 Halsbury's Law of England, 1983, vol. 41, 4th edn, Butterworths, London The Macquarie Dictionary, [Multimedia], version 5.0.0.0, 1/10/01