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  • Licensed manufacture or storage with unreported excise duty

    We know that most businesses do the right thing. However, some businesses that manufacture or produce excisable alcohol, or store underbond excisable alcohol don't report all the excise duty they are required to pay.

    Excisable alcohol is 'underbond' until the excise duty has been paid or otherwise acquitted.

    Selling duty-unpaid alcohol is illegal and is also unfair to other businesses who are doing the right thing.

    If we approve you to hold an excise manufacturer licence, there are obligations that you must meet, including:

    • keeping proper records of all excisable alcohol you manufacture, produce or store under your licence
    • reporting on your excise return the full and correct amount of excise duty on all excisable alcohol you manufacture, produce or store
    • paying the full and correct amount of excise duty for all excisable alcohol you manufacture, produce or store at the correct time.

    If we approve you to hold an excise storage licence, you need to:

    • keep proper records of all excisable alcohol you store under your licence
    • report on your excise return the full and correct amount of excise duty on all excisable alcohol you store and then enter into home consumption
    • pay the full and correct amount of excise duty for all excisable alcohol you store at the correct time.

    Example two – bonus stock supplied by licensed manufacturer

    A business, that holds an excise manufacturer licence, sells bottles of spirit it has manufactured to a retail bottle shop and includes a significant amount of ‘bonus stock’.

    The manufacturer gives the retailer an invoice for the sale. While the price of the product on the invoice appears to include excise duty, the quantity of product on the invoice is significantly less than what was supplied because the invoice does not include the bonus stock.

    By providing the bonus stock to the retailer, the manufacturer is able to sell the product to the retailer at a cost for the total supply that is less than the amount of the excise duty component of the supply.

    The retailer is then able to sell the product to consumers at a discount, while still making a profit.

    In this example, an offence (see Note) under the Excise Act has been committed by both the:

    • licensed manufacturer
    • retailer.

    Penalties may include having to pay up to five times the amount of duty that would have been payable or criminal prosecution.

    Note: There are various offences and consequences that could apply in this situation.

    End of example

     

    Example three – export diversion by storage licence holder

    A wholesaler, that holds an excise storage licence, stores well-known brands of beer and spirits, underbond at a licensed warehouse.

    The wholesaler pays excise duty at the correct rate on some of the beer they store, at the time it is entered for home consumption. They then load the remaining underbond beer into export containers, at their licensed warehouse. However, they incorrectly declare the beer they are exporting to be spirits in the Australian Border Force (ABF) Integrated Cargo System (ICS).

    The wholesaler then diverts the underbond spirits that they declared to ABF as exported, into the Australian domestic market for sale. They either sell the spirits directly to a retailer, or to a retailer via wholesale distributor, without the payment of excise duty.

    The wholesaler sells the spirits to the retailer at a price that is significantly below the price the brand would usually sell for because no excise duty has been paid on the spirits. The retailer sells the duty-unpaid spirits to consumers at a discount, while still making a profit.

    In this example, an offence (see Note) under the Excise Act has been committed by both the:

    • excise storage licence holder (the wholesaler)
    • retailer.

    Penalties may include having to pay up to five times the amount of duty that would have been payable or criminal prosecution.

    Note: There are various offences and consequences that could apply in this situation.

    End of example

    How to correct a mistake or amend a return

    If you work out you need to change information on an excise return you have previously lodged, for example because you haven't reported and paid all the excise duty you needed to, you should do this as quickly as possible.

    Next steps:

    You may also want to seek independent professional advice.

    Find out about:

    See also:

    Last modified: 06 Apr 2021QC 63184