Along with Spirits and Cocktails Australia, we wrote to the Assistant Treasurer regarding our concerns about the correct application of taxation to alcohol beverage products, including new products, and brought to his attention the possibility that some products may not be classified correctly for taxation purposes. We believe there are products on the market presenting themselves as “brewed” but do not meet the definition of beer, and products marketed as pre-mixed spirits or liquers but are claiming Wine Equalisation Tax eligibility. While our associations wish to pursue broader alcohol tax reform, in the short term, we wish to ensure that products on the market are paying the correct tax rates.
Two types of ready-to-drink beverages have grown in popularity recently: ‘hard seltzers’ and ‘fruity beers’. Hard seltzers are usually a mix of sparkling water with alcohol and flavours, with the alcohol base coming from either a distilled spirit or from a fermentation process, like brewing. Fruity beers are brewed products mixed with fruit flavours. While we are not privy to the private taxation matters of individuals producers, we are aware that fruity beers and some hard seltzers are labelled and marketed as “brewed”. The current alcohol excise structure provides for a much lower applicable tax to products which meet the definition of ‘beer’; however, there are strict criteria under the Excise Act for products to be eligible for this definition. In particular, the product must contain hops, or extracts of hops, or other bitters so that the beverage has no less than four international bitterness units. The product must also contain no artificial sweeteners.
We have had a number of these products tested with the National Measurement Institute for international bitterness units and artificial sweeteners. A number of these products did not measure the requisite four IBUs, and at least one product had a high reading for the artificial sweetener aspartame. We do not believe these products meet the definition of beer for excise purposes, and should be taxed at the rate of “spirits and other excisable beverages”.
Australian Distillers Association
Suite 1601, 447 Kent Street, Sydney, NSW, 2000
ABN 77 622 845 275