Ruling Compendium WETR 2014/1EC
Status: not legally binding







The edited version of the Compendium of Comments is a Tax Office communication that is not intended to be relied upon as it provides no protection from primary tax, penalties, interest or sanctions for non-compliance with the law. In accordance with PS LA 2008/3 it only affords level 3 protection. | This is a compendium of responses to the issues raised by external parties to Draft Wine Equalisation Tax Ruling WETR 2013/D1 Wine equalisation tax: arrangements of the kind described in Taxpayer Alert TA 2013/2 Wine equalisation tax (WET) producer rebate schemes. | This compendium of comments has been edited to maintain the anonymity of entities that commented on the draft ruling. | All references are to A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise stated. | ATO Response/Action taken | Contrived arrangements create market distortions, competitively disadvantage legitimate wine industry participants and threaten the future of the producer rebate itself. | Division 165 may not be the perfect vehicle through which to attack WET schemes as it appears to have been designed primarily for GST schemes and is applied by determining the impact of the scheme on a taxpayer's 'net amount' pursuant to the GST Act. This was highlighted when the Commissioner conducted an investigation of the facts surrounding the scheme outlined in Taxpayer Alert TA 2009/6 (and WETD 2010/1), whereby third party suppliers who did not share in the 'commercial WET benefit' but whose net amounts were reduced as a result of the scheme, were investigated by the Commissioner. | It should be noted that the Commissioner considers that Division 165 is likely to apply to the extent that the associated producer provisions do not operate to reduce an entity's entitlement. | The concerns about the operation of Division 165 to certain other arrangements are noted. However, the Commissioner considers that the application of Division 165 to the WET producer rebate arrangements identified in TA 2013/2 and this Ruling results in the appropriate entities' net amounts being adjusted. | Suggest that the potential for this relatively minor scheme variation should be flagged in the Draft Ruling. | We agree that if the purchaser does not quote its ABN the GST benefit will shift to the non-quoting purchaser. We have not extended the Ruling as suggested because we have not, in practice, seen a pattern of schemes involving this feature. The application of Division 165 to such an arrangement would need to be considered in light of all the relevant facts and circumstances. | There is some uncertainty as to the meaning of the term 'tax benefit'. Presumably the term is intended to refer to the commercial WET benefit as opposed to the GST benefit achieved for the purposes of Division 165. Further clarification would be useful. | We have replaced the term 'tax benefit' with 'GST benefit' in accordance with the text of Division 165. | As choosing not to sell under ABN quote potentially changes the identity of the recipient of the GST benefit, suggest some explanation of why the exclusion does not apply would be useful. | As the High Court found in Commissioner of Taxation v. Unit Trend [2013] HCA 16, the phrase 'not attributable to' in paragraph 165-5(1)(b) is 'concerned with whether the GST benefit in question, which (ex hypothesi) has been got from the scheme, is not one to which the exercise of a statutory choice has entitled the taxpayer'. [1] The benefit obtained in these arrangements is not something to which the interposed entity is entitled as a matter of the exercise of any statutory choice. The benefit is comprised of an entitlement to producer rebate in conjunction with the absence of a corresponding WET liability. The choice of the purchaser to quote its ABN does not, of itself, give the interposed entity an entitlement to the producer rebate. Rather, the benefit is attributable to the sequence of steps that make up the relevant scheme. | Footnote 11 has been amended to briefly explain why paragraph 165-5(1)(b does not apply to these arrangements.