Non-arm's length sales
Non-arm's length transactions may occur where a relationship exists between the parties to the transaction – for example, if the transaction involves:
- an associated company
- staff or shareholders
- suppliers (such as grape growers who supply grapes to wine producers).
If you have a non-arm's length transaction, your liability to WET (or entitlement to a WET credit) is taken to be the amount that it would have been if the transaction was at arm's length.
A wine's taxable value must be based on prices that would be used if the transaction was at arm's length.