Excise on spirits and other excisable beverages
Alcohol products are classified as spirits or other excisable beverages if they are not:
Spirits and other excisable beverages are generally subject to excise duty. You need an excise licence to manufacture them, and you may need permission to otherwise deal with them.
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Spirits are generally alcohol products created through distillation (that is, using a still). Examples include brandy, whisky, rum, vodka and gin.
You need to understand your excise obligations if you are in the business of:
- manufacturing spirits or other excisable beverages
- storing underbond spirits or other excisable beverages
- delivering or selling spirits or other excisable beverages.
We do not grant licences to distil spirits for personal consumption. There needs to be a commercial purpose involved.
Brandy, whisky and rum
The Excise Act 1901 (the Excise Act) has specific definitions for brandy, whisky and rum. They are spirits that meet all the following requirements; they:
- are distilled using the required feedstock
- grape wine for brandy
- cereal grain for whisky
- sugar cane products for rum
- possess the taste, aroma and other characteristics generally attributed to brandy, whisky or rum
- are matured in wood for a minimum of two years.
Blending of spirits
EXC 2020/1 Excise (Spirit blending exemptions) Determination 2020 (No. 1) contains detailed information about when the blending of spirits is not the manufacture of an excisable product.
Spirits are excise free when used for concessional purposes or made unfit for human consumption (denatured).
You don't need a permit to purchase spirit that has been denatured using a formula approved by us. However, you need a permit to purchase spirit that has been denatured using a non-approved formula.
For more information see Concessional spirits.
Other excisable beverages
Other excisable beverages (OEBs) are beverages containing more than 1.15% alcohol by volume excluding beer, brandy or wine. OEBs include:
- pre-mixed spirit-based drinks (which are a type of ready-to-drink (RTD) beverage)
- fermented products that aren't beer or wine (for example, cider that wine equalisation tax doesn't apply to).
If you mix two or more alcoholic beverages to produce a new alcoholic beverage, the tax treatment will vary depending on both the ingredients and the alcoholic strength of the final product. Generally, if you mix an excisable alcohol beverage with another excisable alcohol beverage, the final beverage is subject to excise duty and requires an excise manufacturer licence.
However if you mix an excisable alcohol product (including excisable alcoholic beverages) with wine that wine equalisation tax applies to, you should contact us to determine the correct tax treatment.
Beverages that are not produced by distillation, and do not contain any spirit produced by distillation, can be made without an excise manufacturer licence including where they are made:
- for non-commercial purposes
- using non-commercial facilities and equipment.
These types of beverages typically include fermented products such as home brewed beer, cider and wine.
Difference in excise duty rates for spirits
We divide spirits into various classes (or tariff sub-items). Each has its own rate of excise duty per litre of alcohol.
In practice, the excise duty rates for spirits only differ between:
- brandy (spirit distilled from grape wine in such a manner that it has the taste, aroma and other characteristics generally attributed to brandy)
- concessional spirits (including denatured spirit)
- all other spirits including OEBs.
When you need our permission to deliver bulk spirits or other excisable beverages
You need our specific written permission to enter spirits or OEBs (other than concessional spirits) into the Australian domestic market in a container with a capacity of more than two litres.
For example,a licensed distiller may want to sell spirit packaged in a 20-litre plastic container directly to pubs and clubs, where it will be used to prepare mixed alcohol beverages (such as cocktails) for consumption on the premises. The distiller cannot sell the spirit to those pubs and clubs without first obtaining written permission from the ATO to enter the spirit packaged in the bulk container into the Australian domestic market’.
You need to submit your request to us in writing and provide:
- details of the product
- the container size
- the intended market (for example, pubs and clubs).
We cannot provide permission to enter spirits or OEBs that are packaged in a container with a capacity of more than two litres where they are to be repackaged into any other container for the purposes of retail sale.
Penalties may apply for the entry of spirits without permission. Spirits or OEBs packaged in a container with a capacity of more than two litres can be supplied underbond and repackaging for retail sale may be undertaken at excise licensed premises, prior to the goods being entered into the Australian domestic market.
Alternatively, these goods can be entered into the Australian domestic market in containers with a capacity of two litres or less, and then repackaged into other containers for the purposes of retail sale. Permission is not required for this process.
You can contact us for more information.
Stills used to distil alcohol
To use a still of any capacity to distil alcohol, you must have an excise manufacturer licence. Severe penalties apply if you manufacture spirits without one.
For us to grant you a manufacturer licence we consider your situation, such as:
- that you intend to distil spirits for a commercial purpose (we do not grant licences to distil spirits for personal consumption)
- the security of your premises
- that you will pay the correct amount of excise duty when required.
Excise duty is generally payable on alcohol you distil, even if you don't have a licence. If eligible, you may be able to apply an automatic remission of the excise duty applicable to your distilled products. The maximum you can apply each financial year is $350,000.
To manufacture or sell alcohol (or both), you may also need to check with:
- state liquor licensing
- health agencies
- your local government.
Stills used for other purposes
You can own a still of five litres or less without our permission, but only if you're not using it to distil alcohol.
For a still over five litres in capacity, if you're not a licensed excise manufacturer you must have permission from us to do any of the following:
- manufacture the still
- move or set up the still
- sell or buy the still
- import the still
- have possession, custody or control of the still.
Penalties apply if you don't have the appropriate permission for a still.
Find out how to apply for permission to use a still.
When preparing mixed alcoholic beverages isn't 'manufacture'
We do not consider the following situations to be manufacture of a new excisable alcohol product that either:
- requires an excise manufacturer licence
- further excise duty applies to.
These are when a bartender uses excise or customs duty-paid alcohol, to prepare mixed alcoholic beverages (for example, cocktails) for a customer to:
Information on excise duty payable for businesses that manufacture, store or sell spirits and other excisable beverages.
- consume on the premises
- take away in a sealed, single-serve container and consume soon after purchase – the container can't be one designed for medium to long-term storage, such as the types of cans or bottles that are used in manufacturing RTD beverages.