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ANOTHER CRIPPLING rise in alcohol excise for spirits’ producers this week – to nearly $100 per litre – will put further pressure on Australian spirits manufacturers.
Spirits and Cocktails Australia chief executive Greg Holland described the excise hike of 3.7% as a “cruel blow” for an industry already hit hard by high inflation.
“This latest excise hike means that spirits producers are now staring down the barrel of paying $100 per litre of alcohol. Australia already pays the third highest spirits tax in the world, with the impost worsening every six months due to these automatic CPI increases,” Mr Holland said.
“It is unsustainable.”
“This six-monthly tax hike is felt by spirits producers right across the nation. It is a handbrake on the jobs, investment and innovation needed to help our industry truly compete on the world stage,” he said.
“Australia’s most exciting industry is being held back by one of the world’s most punitive tax systems.”
Mr Holland said the spirits sector delivers $11.6 billion in total value-add to the Australian economy and employs around 5,000 people in manufacturing. Critically, two-thirds of these manufacturing operations are in regional and rural Australia, bringing important economic benefits to these communities.
“But we are still only seeing a fraction of the potential that the Australian spirits industry represents – and that will continue while we are made to suffer this crippling tax system,” he said.
Australian Distillers Association chief executive Paul McLeay said the industry understood the challenges facing the Federal Budget but that the time was right to consider “modest changes” to current spirits excise arrangements to unlock opportunities for investment and growth.
“A simpler, fairer tax system will turbocharge the investment environment for spirits producers, both domestic and global, to create premium drinks for local consumers, as well as grow export markets,” said Mr McLeay.
“It will be a win-win. We can have the world’s best producers of high-quality spirits right here in Australia. All we are asking for is sensible and modest reforms from a Federal Government aiming to build up the capability of domestic manufacturing industries,” he added.
On behalf of our members, we have lodged a joint Pre-Budget Submission, with our colleagues from Spirits and Cocktails Australia, for consideration ahead of the 2023-24 Federal Budget.
Our submission calls on the Government to make modest changes to Australia’s spirits tax regime – by reducing the spirits excise rate and freezing CPI indexation – to create the conditions for the sustainable growth of the Australian spirits industry.
The key messages underpinning our submission include:
This latest CPI increase means we are now staring down the barrel of paying $100 tax per litre of alcohol. This means Australian distillers cannot adequately invest to expand our businesses and explore new opportunities, like export or distillery door tourism. This particularly impacts regional communities because two-thirds of distilleries are based in regional areas. It also runs contrary to the government’s ambition to build local manufacturing capability.
We need you to write to your local MP to seek their support to fix our unsustainable spirits tax. We have attached a draft for you to use, or you can use your own words.
To view the Pre Budget Submission please follow the links below.
Your alcohol excise duty rates will increase from 1 February 2023.
You must use the:
latest excise return
For quick access to the latest rates, save our rates webpage to your favourites.
We encourage you to lodge your excise return using our Online services for business and refer to our step-by-step guide on how to lodge.
When you lodge your excise return, remember to:
Coming soon to Online services
From mid-2023, there will be new functions in our Online services including the ability to:
If you're not already using Online services for business to lodge your excise return, now is a good time to start.
Find out more
The draft Ruling sets out the Commissioner’s view of the meaning of ‘legally and economically independent’ for the purposes of the ‘excise remission scheme for manufacturers of alcoholic beverages’ (Remission Scheme) and the ‘excise refund scheme for alcohol manufacturers’ (Refund Scheme). The Remission Scheme replaced the Refund Scheme for eligible alcoholic beverages that entered home consumption on or after 1 July 2021.
The Ruling does not consider the other eligibility criteria for the Remission Scheme or the Refund Scheme.
Under the Remission Scheme, an entity is only entitled to a remission for goods entered in a financial year if the entity is legally and economically independent from any other alcohol manufacturer that has already received a remission for goods entered in the same year.
The phrase ‘legally and economically independent’ is not defined in the Excise legislation. The draft goes on to provide factors in determining what tis legal independence and economic independence.
The ruling does not appear to create any new factors or concerns, but simply clarifies existing arrangements.
The recent ATO Consultation paper, notes:
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.
Environment Ministers are considering expanding the Container Deposit Scheme to include full bottled spirits. Consultation is currently open in NSW and WA. QLD and ACT will begin public consultation soon. SA has already closed consultation.
Our members are concerned about the move by multiple states and territories to expand the scope of their respective container deposit schemes to include full-strength spirits bottles. Our members are firmly committed to the principles of environmental sustainability, resource recovery and the circular economy. Along with Spirits and Cocktails Australia, we have made a submission to the Federal Environment Minister along the lines that as both global and local industry stakeholders with strong links to agricultural inputs, our members and our customers embrace these principles as necessary to protect our environment and optimise the costs of manufacture. Our largest members have set strong global targets to reduce energy, water and waste, address climate change and biodiversity, commit to best practice land stewardship, and increase the use of recycled and recovered materials in our products.
Our members believe the ultimate objective of any scheme seeking to meet the objectives of a circular economy would be one which maximised the capture of available material that can be recycled – not just those from beverage containers. It seems to our members that a container deposit scheme that targets only beverage containers is incomplete and inefficient, where there are alternative solutions available that could capture recyclable materials from a broader range of products.
In our informal discussions with environment Ministers we have argued that spirit bottles do not feature in the litter chain, the cost to both administer, as well as valuable real estate on labels are of significant concern. We also note the CDS administers are predominantly run by soft drink and beer manufacturers.
The Australian Distillers Association has made and will continue to make submissions to the reviews.
Many of the reforms are for new licence applications and amendments, streamlining processes and transparency and improving the consultation process for community stakeholders. A risk-based approach for licensing decisions will be applied, and there is an identified need to liberalise conditions and flexibility to support a 24-hour economy. The paper seeks views about consolidating the number of licence types, and to extending trading ours in some limited ways. This will more directly impact retailers and hospitality, although it will impact applications for pop-up licences and small distilleries which want to provide tastings. The paper also confirms an intention to continue to allow restaurants, cafes and small bars to sell limited alcohol (including RTDs and house made cocktails) with takeaway meals.
The paper proposes NSW could allow producers to promote and sell their own product at any “event primarily held for the purposes of promoting and selling produce from the hospitality industry or a particular region”. This, for example, would allow you to sell our products at regional or Sunday markets that offer a mix of produce, crafts and artisanal products. Also, while wineries currently have flexibility to operate multiple premises under one licence, the same does not apply for breweries and distilleries. To open more options for them to market and sell their brands in a specific region or locality, the paper proposes all NSW liquor producers could be allowed to run multiple premises provided the sites are in reasonable proximity.
The paper proposes that venues that only sell non-alcoholic beer, wine and spirits (under 1.15%) should not need a liquor licence. However, these products could not be promoted to minors, and the paper asked if L&G NSW should investigate complaints around these products being promoted to minors.
The Australian Distillers Association made submission after seeking feedback from members in NSW.
Recently the Economic Society of Australia published an article about the Australian alcohol tax system and the modelling of harm for various types of beverages. It notes that regular and mid strength beer is under taxed, and pre-mixed spirits in a bottle (but not a can) may be overtaxed. The paper concludes Alcohol taxation is one of the main policy instruments used by governments around the world to correct for market failures and negative externalities associated with excessive alcohol consumption. It also notes “The current Australian alcohol tax system is complex, anomalous and incoherent. There is a great need for reform and simplification.”
The Victorian Government has announced, they will extend the Victorian Distillery Door Program for an additional 2 years. This is an additional $10 Million for 2024-2026 and will be distributed on similar lines to the current program.
We are delighted to announce the first release of your 2023 Australian Distillers Association Annual Conference. Join over 400 brilliant and accomplished minds at Australia's premier event for Australian craft distillers, global producers and industry partners.
Expect best practice content, how to guides, industry updates, news and market innovations from our speakers and sponsors.
We've scheduled in more networking time this year and are introducing a trade fair for those that want to get there early for the welcome drinks and find out about our conference partners and sponsors innovations and industry news. There will also be more chances to engage with your peers throughout the conference with a new format and exceptional environment. Invite your colleagues, partners and industry guests to the 3-day event. Additional Gala dinner tickets can be purchased for spouses and partners for those attending the full event.
Don't miss out on the industry tours to regional VIC distilleries, which were an outstanding success last year.
Delivering the theme of Safe, Smart and Sustainable we look forward to seeing you there.
View the conference page here and click on the relevant links to book.
BOOK DIRECTLY HERE
For Sponsorship opportunities, please click below.
Australian Distillers Association
Suite 1601, 447 Kent Street, Sydney, NSW, 2000
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