Why does WFA have a wine tax policy?
The Australian wine industry is unduly disadvantaged because it is the highest tax regime in the wine producing world.
Our vision for the industry
To promote an efficient and fair taxation regime for Australian wineries and to minimise regulation.
In particular, WFA is pursuing Wine Equalisation Tax (WET) exemption on the first $6 million of domestic sales, with 29% WET to apply after that.
How will we achieve this?
The Federal Government's new WET Producer Rebate scheme applies for the first $1.72 million in wholesale sales per entity. The impact of this scheme is being reviewed and WFA is working to achieve the following in the meantime:
- Maintenance of the new rebate in 'real' terms through annual indexation of the threshold
- A policy commitment from all political partiers that wine taxation will not be increased
- Confirmation from the remaining states of Queensland and Tasmania that they will retain the State Cellar Door and Mail Order rebate scheme
- Pursuit of the removal of WET from applications to own use, thereby ensuring taxation consistency between WET and GST
What impact have we had on this issue so far?
Wineries pay less tax!
WFA worked for more than three years to achieve changes in wine tax, namely a 600,000 litre WET exemption for all wineries. In response, the Federal Government announced a WET producer rebate for the first $1 million of wholesale sales per entity in the 2004 Budget. and then increased it to $1.72 million in the 2006 Budget .
This is a significant outcome for the Australian wine industry, with over 90% of wineries now paying no WET. In addition, with the retention of the State Cellar Door and Mail Order rebate by all states (except Tasmania and Queensland to date), almost every single winery in Australia now pays less tax.
What activities are we undertaking to achieve the vision?
We're working on a range of activities and programmes to pursue 'an efficient and fair tax regime for Australian wineries and to minimise regulation', including:
- A review of the new Federal WET Producer Rebate and the wine tax regime in general on Australian wineries of all sizes
- An analysis of the actual costs of the new Federal WET Producer Rebate relative to WFA and ACIL Tasman estimates and Treasury estimates
- An analysis of the definitions and workings of the WET legislation and the impact this has had on the business environment for Australian wineries
Background and other information
WFA is aware of concerns that the rebate could have a negative impact for some small and medium wineries in the case of mergers and acquisitions. There is also an issue with the definition of 'entity', with some wineries previously eligible for the State Cellar Door rebate not being eligible for the Federal Producer Rebate due to investment from larger wineries.
Australian Tax Office Wine Equalisation Taxation fact sheets
Australian Tax Office Effective Life Determinations: Wine Manufacturing Assets (March 2008)
Who's working on wine tax?
- Stephen Strachan, Chief Executive:
phone 08 8222 9255, email ceo@wfa.org.au
- Dominic Nolan, Director, Government Relations:
phone 02 6239 8300, email dominic@wfa.org.au
- Doug Young, Policy Director:
phone 08 8222 9255, email doug@wfa.org.au
Members are welcome to contact Stephen, Dominic or Doug to discuss the wine tax issue.
