The Assistant Treasurer, Senator Rod Kemp, today announced details of the Commonwealth’s Wine Equalisation Tax (WET) rebate scheme, which will assist small winemakers.
The scheme, together with the existing State subsidy, will make the first $300,000 (wholesale value) of cellar door and mail order sales effectively free from WET.
Currently, the States provide winemakers with a subsidy of 15 percent of the wholesale value of wine purchased by unlicensed persons at the cellar door and by mail order.
As part of tax reform, the Government undertook to ensure that cellar door and mail order sales up to $300,000 per annum will in most cases be effectively free from WET. The arrangements will have two components: the existing State subsidy with the Commonwealth providing additional assistance.
The Commonwealth assistance tapers to zero for sales between $300,000 and $580,000 per annum. For example, if the wholesale value of the winemaker’s cellar door and mail order sales is $400,000, the State will pay its subsidy of $60,000 to the winemaker and the Commonwealth will rebate $27,000 of the WET liability. Sales in excess of $580,000 (wholesale value) will only attract the 15 percent State subsidy.
The combination of the existing State subsidy and the Commonwealth rebate will mean that cellar door and mail order sales for small wine producers will effectively be free from WET on sales up to $300,000 per annum.
Internet sales handled as a direct order from an unlicensed person to the winery are analogous to mail order sales and will also attract the rebate.
Producers of wine, including those who supply grapes to contract winemakers to be made into wine, will be eligible for the Commonwealth rebate. Producers who supply grapes to contract winemakers must have some involvement in the winemaking process and assume some financial risk in relation to the wine produced, but will not be required to own the production facilities to be eligible for the Commonwealth rebate. Persons purchasing bottled wine or bulk wine for bottling and sale by cellar door or mail order will not be eligible for a rebate on this wine.
To further reduce administrative costs, wine applied to a winemaker’s own use, as defined in the WET legislation, will be eligible for the rebate. This means the rebate will apply to wine used for tastings, promotions or charitable purposes and will relieve the financial burden for small winemakers of paying WET on product which is not actually sold.
Th e Commonwealth WET rebate will be delivered to winemakers as an offset against their WET liability on their Business Activity Statement. This approach will minimise administration costs for the wine industry and improve cash flow for business.
The $300,000 threshold (wholesale value) will apply to licensed cellar door outlets operated by eligible producers (further detail will be provided in the legislation establishing the scheme).
The Australian Taxation Office will administer the scheme.
CANBERRA
11 April 2000
Media contacts: Richard Allsop Assistant Treasurer’s Office (02) 6277 7360 Alan Horan Australian Taxation Office (08) 8208 1389