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Sladen Snippet - Changes to the Wine Equalisation Tax (WET) Rebate eligibility criteria and cap reduction

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In light of the 2016-17 Federal Budget handed down earlier this year, followed by consultation with participants in the wine industry, the Turnbull Government has announced on 02 December 2016 reforms to the WET Rebate. The purpose of these reforms, as stated by Assistant Treasurer and Minister for Small Business, Kelly O’Dwyer is to address “distortions in the market through the misuse and exploitation of the WET Rebate scheme”.

The key changes to the Government’s eligibility criteria to the WET Rebate will apply form 1 July 2018, which is a year later than announced in the Budget, and include:

  • Producers must own 85% of the grapes at the crusher used to make the wine, and maintain ownership throughout the wine making process;
  • Wine must be packaged in a container not exceeding 5L and branded with a registered trade mark for domestic retail sale;
  • The Rebate claims must be linked to the WET being paid; and importantly
  • The Rebate cap will be reduced from $500,000 to $350,000.

In order to benefit from the Rebate, wine producers will need to satisfy the new eligibility criteria, including the new Rebate cap, and should be mindful that ‘associated producers’ are grouped for WET Rebate purposes. Therefore, the effect of the new cap imposed on ‘associated producers’ could mean that some producers will lose their ability to access a full WET Rebate otherwise available to non-associated wine producers.

For those who exceed the Rebate cap, the Government will offer a further $100,000 allowance per annum, as part of the new Wine Tourism and Cellar Door grant. The purpose of the new grant is to encourage visitors to wine regions.

The final WET Rebate reforms will be introduced into Parliament next year and the eligibility criteria to qualify for the Wine Tourism and Cellar Door grant will be finalised after consultation with the wine industry.

To discuss this article, or for further information please contact:

Patricia Martins
Lawyer
Sladen Legal
T +61 3 9611 0138
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pmartins@sladen.com.au

Daniel Smedley
Principal | Accredited Specialist in Tax Law
Sladen Legal
M +61 411 319 327|  T +61 3 9611 0105
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: dsmedley@sladen.com.au

Daniel Smedley