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20 Dec 2022 9:17 AM | Anonymous member (Administrator)

The recent ATO Consultation paper, notes:

  • Alcohol manufactured in Australia is taxed under either the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) or the Excise Tariff Act 1921 (Excise Tariff Act).
  • Alcoholic beverage manufacturing continues to evolve to meet changing consumer demands and tastes. Hard seltzers and similar products are being produced from various bases (spirits, beer, wine, cider or perry) and additives. Alcoholic beverage manufacturers often seek advice about whether their product ideas will meet the definition of ‘beer’ under the Excise Tariff Act or ‘cider or perry’ under the WET Act, where the final product includes varying proportions of unfermented substances. Whether such products are taxed at the relatively concessional rates for beer, or cider or perry can be difficult to establish because there are no essential character tests or bright-line tests or prescribed proportions of acceptable ingredients within the law.
  • The absence of such tests within the law leads to uncertainty and increased compliance costs and risks for alcoholic beverage manufacturers. The paper provides some acceptable, practical compliance parameters that can be used by alcoholic beverage manufacturers. Where products are within these parameters, the Commissioner will not apply compliance resources to challenge such matters.

The significant concern for our members is that our competitors may be making a product that looks like an RTD in the consumer eyes but is only taxed at the beer concessional rate and is thus significantly cheaper than our members spirits based product.

The Australian Distillers Association propose making a submission along the lines that it remains anachronistic that two alcoholic beverages with the same alcoholic strength have significantly different tax liabilities based on the fact that one product is brewed and the other is distilled. There is an urgent need for the Federal Government to consider the implications of this tax treatment, both in terms of government revenue and other policy objectives. While we recognise that broader tax reform of alcohol products is beyond the scope of this guidance and is a longer term project, it is our view that, in the meantime, there needs to be clear ATO advice backed by strong enforcement of the existing taxation rules.

Australian Distillers Association would like to see more detail in the draft Guidance to reflect some of our concerns about whether products are correctly categorised for tax treatment.

While we do not know how individual producers of brewed seltzers and fruity beers are defining their products for the purposes of alcohol tax, we remain concerned that there are products on the market retailing at prices which imply they are paying lower (beer) tax rates, while the products themselves do not present as meeting the definition of beer under the Excise Tariff Act.

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Australian Distillers Association

Suite 1601, 447 Kent Street, 
Sydney, NSW, 2000

ABN 77 622 845 275

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