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  • Unlicensed manufacture and non-payment of duty

    Sometimes businesses or individuals illegally manufacture, produce or sell excisable alcohol without:

    • an excise licence
    • paying excise duty.

    Where we see this activity occurring, we treat it very seriously.

    Generally, you need an excise manufacturer licence to manufacture or produce excisable alcohol in Australia. The only exception is brewing or fermenting certain alcoholic beverages for personal consumption, which is detailed below.

    To manufacture, produce or sell excisable alcohol, you may also need to check the requirements of other state and local organisations, including:

    • state liquor licensing organisations
    • health agencies
    • local government.

    On this page:

    When you need a licence

    If you manufacture or produce excisable alcohol for commercial purposes (that is, to sell to others, or offer for sale), you need:

    • an excise licence
    • to pay excise duty.

    Distilling alcohol

    To distil spirits, you need an excise manufacturer licence from us. Where you hold a manufacturer licence from us, you do not need to apply for separate permission from us in relation to your still. We generally do not grant licences to distil spirits for personal consumption. There needs to be a commercial purpose involved. Severe penalties apply if you distil alcohol without a licence.

    The only stills you do not need a licence or permission in relation to, are those stills that are five litres or less and are not used to distil alcohol.

    Find out about:

    Watch:

    Media: Distil the facts about alcohol
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiub87koiwExternal Link (Duration: 00:30)

    Example one – low-priced stock manufactured without an excise licence

    A person distils spirit without an excise manufacturer licence, intending to sell it. They then bottle the spirit and label it to give the appearance of a legitimate product, using:

    • manufacturer details on the label that are fictitious, or that are not those of the entity that distilled the spirit
    • a barcode that belongs to an entity other than the manufacturer specified.

    The person does not report or pay any excise duty on the product. They sell it to a wholesale distributor for a price that is significantly lower than the excise duty component (and GST) that should be included in the selling price. For example, the excise duty payable on a 700 ml bottle of spirit with an alcoholic content of 37% alcohol by volume is about $22.00 per bottle (see Note 1). Therefore, that product would generally have a retail price greater than $22.00, particularly since the manufacturer would also have had other costs, taxes and overheads to manufacture and sell a bottle of the spirit.

    The wholesale distributor in this example does not hold an excise storage licence. This means they are not permitted to store alcohol that has not had duty paid on it and is therefore only able to purchase duty-paid alcohol from its suppliers. Therefore, the wholesale distributor should know the purchase price must include excise duty. They on-sell it to a retail outlet for a price that is still less than, or similar to, the excise duty component (and GST) that should be included in the selling price.

    The retailer then sells the duty-unpaid spirits to consumers.

    In this example, an offence (see Note 2) under the Excise Act has been committed by each entity in the supply chain, the:

    • person who manufactured the product without an excise licence
    • wholesale distributor
    • retailer.

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

    Note 1: this is an estimation only. Use our Excise duty rates for alcohol to work out specifically for each type of spirit.

    Note 2: There are various offences and consequences that could apply in this situation.

    End of example

    When you don't need a licence

    The only excisable alcoholic products you can make without an excise manufacturer licence are beer and some other fermented beverages that are either:

    • products that wine equalisation tax applies to
    • not spirits or beverages that contain spirits that are made using non-commercial equipment and for non-commercial purposes (that is they are for personal consumption rather than sale).

    Some common examples of alcoholic products you can make without a licence are:

    • home-brewed beer
    • fermented cider and wine.

    What to do if you identify a problem

    Contact us early if you think you may have made a mistake, or you have questions about when you need:

    • an excise licence
    • to pay excise duty.

    We will work with you to help you understand and meet any applicable excise obligations.

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    Last modified: 06 Apr 2021QC 63184