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  • Excise remission scheme for manufacturers of alcoholic beverages

    From 1 July 2021 the Excise remission scheme for manufacturers of alcoholic beverages (Remission scheme) provides eligible alcohol manufacturers with a full (100%) automatic remission of excise duty, up to a maximum of $350,000 per financial year, on alcoholic beverages they manufacture and enter into the Australian domestic market for home consumption.

    From 1 July 2021, you must use the updated excise return so the automatic remission can be applied.

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    The Remission scheme

    The Remission scheme replaces the Excise refund scheme for alcohol manufacturers (Refund scheme). Transitional rules under the Remission scheme will impact your entitlement to a refund under the Refund scheme for goods entered for home consumption prior to 1 July 2021. Refer to the transitional period information below for more detail.

    For information about the previous Refund scheme, refer to Excise refund scheme for alcohol manufacturers.

    • Excise remission scheme for manufacturers of alcohol

    Media: Excise remission scheme for manufacturers of alcohol
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7odjwnbgdExternal Link (Duration: 09:55)

    How the new automatic remission works

    For goods entered for home consumption on or after 1 July 2021, a 100% automatic remission applies. All eligible businesses can receive a maximum of $350,000 per financial year.

    You continue reporting all the goods you have entered for home consumption for the period. This applies whether you:

    • have a periodic settlement permission (PSP)
    • are on prepayment and applying for a delivery authority.

    However, you must use the updated excise return when you lodge to enable you to apply the remission.

    You are no longer required to pay the excise duty in full and then use the excise refund form to claim a refund.

    Note: You are required to keep records of how much automatic remission you have applied so that you do not exceed the $350,000 per financial year cap. Once you have reached the $350,000 cap in a financial year, you will need to pay the required excise duty on all subsequent alcoholic beverages entered for home consumption in that financial year.

    Becoming a manufacturer part way through the financial year

    If you obtain your manufacturer licence part way through the financial year, you calculate the maximum remission by multiplying $350,000 by the number of days in the period then dividing the result by 365 days.

    The period starts from the date you first obtain your manufacturer licence and ceases at the end of that financial year.

    Who is eligible

    All eligible participants in the previous Refund scheme will be eligible for the new automatic remission, and the existing eligibility criteria will continue to apply.

    To be eligible for this automatic remission you must:

    • hold a manufacturer licence authorising you to manufacture alcoholic beverages
    • have manufactured an alcoholic beverage
    • have fermented or distilled at least 70% of the alcohol content by volume of the alcoholic beverage
    • be legally and economically independent of any other entity that has received a remission under the scheme (or, in certain circumstances, a refund) – if you're not legally and economically independent of any other entity, only one manufacturer in your group is entitled to the remission (or refund).

    Situations where an alcohol manufacturer will not be legally and economically independent include:

    • it's a subsidiary of another alcohol manufacturer
    • another alcohol manufacturer subsidises its operations
    • where one or two individuals or companies control or have majority shareholding in multiple excise licence holders.

    A detailed explanation of the remission scheme and the eligibility criteria can be found in Chapter 7 of the Excise Guidelines for the Alcohol Industry.

    Additional requirements for distilled beverages

    For remissions for distilled alcoholic beverages, you must also:

    • satisfy the still ownership test
    • own one or more stills that
      • have a capacity of at least five litres
      • you install ready to use at the beginning of the financial year
      • you used to manufacture an alcoholic beverage during the financial year.

    The above applies if the financial year is not the first or second financial year in which you are eligible for a refund or remission under the Refund scheme or Remission scheme.

    A still that you install ready to use at the beginning of the financial year doesn't have to be the same still that you use to manufacture an alcoholic beverage during the financial year.

    Still ownership test

    The still ownership test must effectively apply for the entire financial year in which the goods are entered for home consumption. If the remission is applied part way through a financial year, the test applies between the start of the financial year and the day on which the goods were entered for home consumption. There must also be a reasonable expectation that the test will be satisfied for the remainder of the financial year.

    Exclusions

    The scheme excludes:

    • excisable goods entered for home consumption on or before 30 June 2021 – the Excise refund scheme for alcohol manufacturers (Refund scheme) applies to goods entered on or before 30 June 2021
    • products to which wine equalisation tax applies
    • ready to drink (RTD) mixed spirits, where another manufacturer produces the spirit and you then blend that manufacturer's spirit with a non-alcoholic beverage to create an RTD product.

    How the remission is applied in your excise return

    The updated excise return must be used for goods entered on or after 1 July 2021. At Label F in the Product details section, select 'Yes' to apply the alcohol manufacturer remission to the line entry for eligible product.

    If you use an outdated form, the automatic remission cannot be applied.

    You are required to report all goods entered for home consumption during the period, whether or not the remission is applied.

    What to do if you have used an old version of the excise return

    If you have used an old version of the excise return to report product that you wanted to apply the automatic remission to, you will need to lodge again for that period and use the current excise return.

    What to do when you reach the $350,000 cap

    Once you have reached the $350,000 cap in a financial year, you can no longer apply the automatic remission. This means, you must select 'No' in Label F in the Product details section of your excise return for all product reported for the rest of that financial year.

    If you reach the $350,000 cap part-way through a reporting period, when you lodge your excise return for that period, you will need to use separate lines in the Product details section and at Label F, select:

    • 'Yes' for eligible product lines up to the cap amount.
    • 'No' for the remaining product lines.

    You will need to do separate lines, even if the product is the same Tariff item.

    Example one

    Distillery Co have applied $325,000 automatic remission in their excise returns, up to October 2021. This means they only have $25,000 automatic remission they can apply in future returns before they reach the $350,000 cap for that financial year.

    The excise duty payable on product included in their November 2021 excise return, before applying the remission, is $90,000.

    Distillery Co need to use separate lines in the Product details section, to apply the remission:

    Line 1 Tariff subitem 3.2 Excise amount $25,000 – Label F Apply alcohol remission to this line – select 'Yes'

    Line 2 Tariff subitem 3.2 Excise amount $65,000 - Label F Apply alcohol remission to this line - select 'No'

    Distillery Co will also need to select 'No' at Label F Apply alcohol remission to this line, on all excise returns for the remainder of the financial year.

    Note: You may not be able to apply exactly $350,000 of automatic remission. However, the total applied must be as close as possible to $350,000 for the year.

    End of example

    Refer to further details on how to correctly complete your form in Excise return and instructions.

    Duty paid incorrectly on goods entered on or after 1 July 2021

    If you incorrectly pay excise duty on goods entered for home consumption on or after 1 July 2021, where you were entitled to apply the remission but didn’t, you will need to apply for an excise refund.

    Any amount of refund claimed in this situation will count towards your $350,000 cap for the financial year. See Excise refund or drawback.

    Example two

    Brewery Co (who has a periodic settlement permission) lodges their excise return for the September 2021 period and pays the full amount of excise duty on the goods entered for home consumption during that period. They then work out that they were entitled to apply the automatic remission to those goods.

    As they have paid excise duty, they cannot apply the remission. Instead, they will need to complete and lodge the excise refund form for the amount of duty they paid on which they would have been entitled to a remission using the ERRO refund code.

    The amount of the refund will count towards Brewery Co's $350,000 cap for the 2021–22 financial year.

    End of example

    Transitional period

    Transitional rules apply for goods entered for home consumption:

    • before 1 June 2021
    • between 1 June 2021 and 30 June 2021.

    Transitional scenarios

    Goods entered before 1 June 2021

    To be entitled to a refund under the Refund scheme on goods entered for home consumption at any time prior to 1 June 2021, you need to have paid the excise duty on or before 30 June 2021.

    Where the duty is paid any time on or after 1 July 2021, you cannot claim either a refund under the previous Refund scheme or apply an automatic remission under the Remission scheme for those particular goods. This is because the Remission scheme only applies to goods entered for home consumption on or after 1 July 2021.

    Example three

    Whisky Co pays excise duty of $5,000 on 21 June 2021 for goods entered for home consumption in May 2021. They can claim $3,000 (that is 60% of the duty paid) subject to the $100,000 cap for the 2021 financial year.

    If they paid the excise duty of $5,000 on 5 July 2021, they cannot claim a refund on the payment under the Refund scheme.

    End of example

    Goods entered between 1 June 2021 and 30 June 2021 with duty paid on or after 1 July 2021

    For goods entered for home consumption from 1 June 2021 to 30 June 2021 (inclusive) where you pay the excise duty on or after 1 July 2021, you can claim a refund (based on the previous Refund scheme) up to a maximum of $8,333.

    This refund does not count towards the $100,000 cap for the 2020–21 financial year (as the payment is made in the 2021–22 financial year) and it will not count towards the $350,000 automatic remission cap under the new Remission scheme.

    To claim the refund, lodge an excise return, pay the excise duty and then claim the refund using the excise refund form.

    Example four

    Bottler's Gin pays excise duty of $10,000 on 20 July 2021 for goods entered for home consumption in June 2021. They can claim $6,000 (that is 60% of the duty paid). This amount is under the maximum of $8,333.

    If they had paid excise duty of $20,000, they would be only able to claim $8,333 (being the maximum allowable for this transitional provision).

    End of example

    Note: If the excise duty on goods entered for home consumption in June 2021 was paid on or before 30 June 2021, you can claim a refund (under the Refund scheme and it is included in the $100,000 cap for the 2020–21 financial year.

    Example five

    That's Rum pays excise duty of $25,000 on 30 June 2021 for goods entered for home consumption in June 2021. They can claim $15,000 (that is 60% of the duty paid) as long as they still have that amount available in their $100,000 cap for the 2020–21 financial year.

    If they had already claimed a refund of $95,000 on excise duty paid since 1 July 2020, they would only be able to claim a further $5,000 (rather than $15,000), before they reach the $100,000 cap.

    End of example

    To apply for a refund under the Refund scheme, you must apply within 12 months from the day after you pay the excise duty.

    Contact us

    Contact us if you need more information about the new automatic remission or the transitional scenarios.

    Last modified: 23 Dec 2021QC 65935