This document explains how to complete your business activity statement (BAS) if you are a wine retailer with a wine equalisation tax (WET) liability. It also shows how to calculate the amount you should enter at the WET labels on your BAS.
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You must enter an amount at labels 1C and 1D:
- enter actual amounts, even if your liability and rebate are the same
- enter zero if you have nothing to report.
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Al's Liquor Barn operates a retail liquor store. It purchases wine from winemakers and distributors at prices inclusive of both WET and goods and services tax (GST).
WET is shown as a separate item on invoices issued by the wine supplier, as required under WET legislation. The wine supplier, rather than the wine retailer, pays the required WET amount to the Australian Taxation Office (ATO) on their BAS.
Under normal circumstances the WET paid by Al's is not claimable as a wine tax credit or as a GST credit and Al's does not need to include the amount of WET payable on its BAS. The WET forms part of Al's cost base and is passed on to customers in the price of the wine it sells.
There are some circumstances under which Al's will have a liability for WET. For example:
- if Al's makes a wholesale sale (that is, to someone who intends to resell the wine, such as another liquor retailer, local club or restaurant)
- if Al's sells wine that has not been taxed (that is, wine purchased from a winemaker who is not registered or required to be registered for GST).
What if Al's makes a wholesale sale?
If Al's makes a wholesale sale, WET is payable at a rate of 29% of the wholesale selling price. This amount must then be shown at label 1C on Al's BAS as WET payable. Al's can claim a credit for the amount of WET paid to the wine supplier on the purchase of that wine. This credit may be claimed at the WET refundable label 1D on the BAS.
- the GST included is $10, which Al's can claim as a GST credit
- the WET included is $22.48.
The cost of the wine to Al's less WET and GST is $77.52.
Al's sells that case of wine to another retailer for $85, before WET and GST.
To find how much WET and GST they must charge, Al's uses this calculation:
Wine equalisation tax payable ($85 x 29%)
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$24.65
(include at label 1C)
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GST payable ([$85 + $24.65] x 10%)
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$10.97
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The selling price inclusive of wine equalisation tax and GST is $120.62.
In this example, Al's can claim a credit for the amount of WET paid to the distributor on the purchase of the wine ($22.48) at label 1D on the BAS. If, however, Al's did not sell the wine by wholesale, it would not be entitled to claim a credit for the WET paid on purchase.
What if Al's sells untaxed wine?
If Al's purchases wine from a winemaker who is not registered or required to be registered for GST, Al's will need to pay WET when it sells that wine. This is because no WET was payable when Al's bought the wine. For a retail sale, the taxable value will be half the selling price of the wine. For a wholesale sale, refer to the above calculation.
Example
Al's purchases a bottle of wine from an unregistered winemaker for $15.
There's no GST credit available.
Al's makes a retail sale of that bottle of wine for $30, including WET and GST.
To find the amount of wine equalisation tax and GST payable, Al's uses this calculation:
GST payable ($30 x 1/11)
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$2.73
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Wine equalisation tax payable ($30 x 1/2 x 29%)
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$4.35
(include at label 1C)
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When can Al's claim credits for overpaid WET?
Legislation allows for some circumstances where credits for overpaid wine equalisation tax can be claimed at the WET refundable label 1D. For instance, Al's may be entitled to a WET credit when it pays tax on the purchase of wine and then sells that wine at a price that excludes tax.
Example
Al's sells wine to a university for use as course material in a winemaking course. The university quotes its Australian business number (ABN) for the purpose of the WET legislation to allow it to purchase the wine tax-free. Al's is entitled to a credit for the amount of WET excluded from the selling price. GST would still apply to the sale.
- Al's purchases a case of wine from a distributor for $110 (including wine equalisation tax and GST).
- The GST included is $10, which Al's can claim as a GST credit.
- The WET included is $22.48.
- Al's normally sells that case of wine for a retail price of $200 including WET and GST (that is $181.82 exclusive of GST).
To find the tax credit claimable, Al's uses this calculation:
Sale price to the university
([$181.82 - $22.48] + GST)
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$175.27
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WET credit claimable
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$22.48
(include at label 1D)
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Example
A customer purchases and pays for wine and asks that Al's arrange export of the wine to an overseas address. Provided Al's exports the wine as a GST-free supply, the wine will be exempt from WET as well as GST. Again, Al's is entitled to a credit for the amount of WET excluded from the selling price.
- Al's purchases a case of wine from a distributor for $110 (including WET and GST).
- The GST included is $10, which Al's can claim as a GST credit.
- The WET included is $22.48.
Al's normally sells that case of wine for a retail price of $200 including WET and a GST amount of $18.18. Al's exports the wine as a GST-free supply for the customer, deducts the WET paid on the purchase from the selling price and does not charge GST.
To find the tax credit claimable, Al's uses this calculation:
Export price
($200 - $22.48 - $18.18)
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$159.34
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WET credit claimable
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$22.48
(include at label 1D)
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For more information about wine equalisation tax:
If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.
If you have a hearing or speech impairment and have access to appropriate teletypewriter (TTY) or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.
Last Modified: Thursday, 14 January 2010