Agenda item 1 - Introduction, review of action items and minutes – Tom Wheeler
Tom Wheeler informed members that Pauline Zdjelar would be retiring from the ATO later this year so he is assuming the role of Chair.
Members acknowledged and thanked Pauline for her guidance and technical insight which has been essential to the Committee. Members expressed their appreciation and thanks for the outstanding relationships and assistance that Pauline has provided to them and wished her every success in her retirement.
The minutes of the previous meeting of 5 June, 2013 were endorsed. All action items were closed prior to the meeting. No conflicts of interest were declared.
Agenda item 2 - Deregulation – Andrew McIver
Andrew informed the Alcohol Stakeholder Group that both the Government and the ATO are focussing on reducing red tape. Andrew stated that the following discussion was without prejudice to gather thoughts and information from industry, and was neither Government nor Treasury led policy.
Some suggestions may be pursued in due course but others may not. All discussions are for the purposes of understanding what options might be available to reduce red tape and deregulate the system and what impacts those ideas might have if they were implemented.
There was an open discussion seeking ideas from members.
Industry members then provided the following comments on various issues:
- Misalignment between ATO and Customs licencing cycles and the cost incurred by this misalignment is an issue.
- Duplication of licences is cumbersome and expensive. Industry would prefer one streamlined licence.
- Licence renewal preference would be to move to every three to four years rather than on an annual basis (as is currently for Customs licences).
- A licence with no renewal date (unless circumstances alter) would be a significant innovation similar to the Australian Business Number (ABN) which does not expire.
- A single pre-filled form would greatly assist with industry administration costs and time.
- It would be very helpful if industry could nominate an entity representative member and add and delete these on the licence as necessary which would significantly assist in movement permissions.
- Applying to both the ATO and Customs is burdensome.
- Monthly lodgment of excise returns
- Move all entities to a monthly lodgment with a weekly settlement and/or a monthly lodgment and monthly payment. This would align to other taxes and other monthly processes, and provide efficiencies for tax teams.
- Make a regular deposit payment with a monthly reconciliation.
- Monthly lodgment on the business activity statement (BAS).
- Refunds and remissions
- Can rules be simplified and synchronised with Customs?
- Four years should be the standard as refunds may not be recognised within current limited time frames.
Andrew advised that the Government is conducting six monthly red tape reduction reviews. The ATO has commenced work examining the significance of changes required to bring about streamlining, and is examining the ATO’s own administrative practices and reporting requirements with a view to reducing any unnecessary regulatory burden.
The ATO will be developing a plan on how to best progress some of the identified ideas, by tapping into projects already underway in the ATO which may deliver some of the outcomes suggested by members.
Action item: 200514-2-1
Due date: as soon as possible
Responsibility: Naomi Schell to provide link to manufacture ruling Excise Ruling 2012/1 to members.
Secretariat note: Provided link ER 2012/1External Link to Excise Ruling 2012/1 to members with minutes
Action item: 200514-2-2
Due date: as soon as possible
Responsibility: Industry members to provide feedback to the ATO on Ministerial Partnership benefits and priority.
Action item: 200514-2-3 due date: ASAP
Responsibility: Industry members to provide advice to Secretariat as to whether members agree with sharing licencing information with Customs, the ATO and State Governments.
Agenda item 3 - Budget update – Tom Wheeler
Tom Wheeler provided an update on the Federal Budget announcements. The proposed fuel indexation may have some implications for members in terms of rates that can be claimed for on-road and off-road activities. Once the legislation is in place the ATO will change systems and keep industry informed.
Tom advised that the ATO is undergoing significant change, driving a transformational program, with a new mission and vision. We are focused on red tape, the client experience, design of the tax system for the majority of people that do the right thing, compliance and participation.
Agenda item 4 - Wine equalisation tax update – Andrew McIver
Andrew advised that the ATO remains focussed on addressing compliance issues in the wine equalisation tax (WET) rebate scheme. The main focus is on entities being interposed that create additional producer rebates. A number of entities have been investigated for these arrangements, and application of general anti-avoidance provisions.
Thus far there have been approximately 18 cases finalised with assessments raised for $16.5 million in primary tax and $11.6 million in penalties.
A further 36 entities are currently under audit. A number of entities currently under audit have come forward to settle the matter.
Consideration is being given to the application of promoter penalties, and a number are being considered for potential referral to the Commonwealth Director of Public Prosecutions (CDPP) for prosecution.
For the new 2014/15 financial year there will be a continued focus on WET.
Action item: 200514-4-4
Due date: post July 2014
Responsibility: Andrew McIver, ATO, to provide the link when compliance results are published.
Agenda item 5 - Compliance activities – Andrew McIver
Overall level of compliance in alcohol industry is regarded as reasonably high.
- 2013-14 excise activities included:
- Completed 19 cases with some $125,000 in demands made. These related to the misclassification of products and a failure to account for the goods when requested.
- A number of the cases however were educational in nature (generally new to excise type entities). Some entities made adjustments to payments as a result.
- Excise equivalent goods (EEGs)
- Some licencing issues were found with warning letters issued for:
- breach of conditions
- release of goods without authority
- failure to notify Customs regarding release of goods for export.
- One audit found a misclassification of goods which resulted in an adjustment.
- There was one penalty infringement notice issued ($7,650 per infringement).
- Joint activity has commenced with Customs regarding the classification of cider products.
- Information is being obtained from some entities regarding their treatment of cider. This is a scoping exercise to determine the extent of the problem. Information at hand indicates a number of entities are not paying WET on cider products and a further group are treating cider as taxable under the WET scheme when it is believed colours or flavours have been added (and the product should be subject to excise duty).
- 2014/15 continued focus on:
- wine equalisation tax and rebate claims
- cider classification
- exports (concerns over diversion prior to export)
- concessional spirits (following spirits through the supply chain to determine whether the concession was legitimate)
- EEGs (warehouse checks verifying cargo control frameworks in place)
- compliance with licence conditions.
Agenda item 6 - Cider classification – Naomi Schell
Discussion took place as a result of scoping work being undertaken by Client Relationship Managers (CRMs) and possible cider misclassification.
Beverages with an alcoholic content of more than 1.15% that are manufactured or produced in Australia and that are marketed and sold as ‘cider’ are subject to either WET or excise. If the product is not ‘wine’, it will be subject to excise.
Under the WET Act, ‘wine’ includes grape wine, grape wine products, fruit or vegetable wine, cider or perry (pear cider), mead and sake. All of these products are individually defined in the WET Act.
Regardless of whether a product is classified as cider or fruit or vegetable wine, the WET laws will apply in the same way.
A product will be classified as ‘cider or perry’ where it is a beverage that:
This means that under the WET Act, cider includes traditional dry, draught and sweet cider made from apples or pears or a combination of both. It doesn’t include ciders that have flavours added, such as lemon or blackcurrant or anything that may have added colour such as caramel or cochineal.
Where an alcoholic beverage is made by fermenting fruit other than apples or pears, it may still be considered a fruit or vegetable wine. However, to fit within this definition, the beverage cannot have ethyl alcohol added to it (other than grape or neutral spirit). Likewise, any substance that gives colour or flavour cannot be added. The product must have an alcoholic content of between 8-22% inclusive or where fortified, a minimum alcoholic content of 15%.
Where a product that is marketed as cider falls outside either of these definitions, it will be excisable.
Peter Holt advised members not to rely on the Food Standards to classify cider product; producers should rely on the WET law definitions.
In summary, members advised that there were no significant issues in the industry.
Agenda item 7 - New portal arrangements – Jill Tanner
Jill joined the meeting to provide an outline of the new ATO Business Portal.
Jill stated that the ATO Business Portal is now open for excise clients as an additional, secure way to lodge excise returns and other excise and excise equivalent goods forms. The ATO is encouraging all of our clients to deal with us electronically.
Forms on the website are fillable, for example return forms and applications for licence. You will receive instant confirmation and a receipt number from us.
Licence renewals can also be submitted via the portal. You can get started by accessing the link to the ATO Business Portal or contact your CRM; we can work together to assist you in getting started.
Action item: 200514-7-5
Due date: as soon as possible
Responsibility: Jill Tanner, ATO, to provide Portal Help Sheet to members.
Agenda item 8 - Member updates
Sam Haggan asked if meetings would continue to be conducted annually.
Tom confirmed that as a result of the feedback from the 2013 forum review, meetings would continue to be conducted on an annual basis. Tom reminded members that communication and consultation with the ATO can take place at any time outside of the annual meeting via CRMs, Tom Wheeler (chair) and/or the ATO website. Meetings may be organised where a significant need or issue arises for resolution, where appropriate.
Agenda item 9 - Other business – Tom Wheeler
Alcohol indexation information is available on the ATO website at www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Excise/Excise-rates/
Troy Houston advised that the current ‘Growlers’ fact sheet is not very useful; messages are not clear. Naomi agreed to investigate and circulate the current fact sheet seeking specific feedback from members with a view to amending the sheet.
John Gallagher asked the ATO to provide advice on the progress of the Ministerial partnership under the new Government.
Action item: 200514-9-6
Due date: as soon as possible
Responsibility: Naomi Schell, ATO, to circulate current growlers fact sheet seeking feedback from members.
Secretariat note: link to current fact sheet is https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/In-detail/Alcohol/Beer/Growlers-and-repackaging-duty-paid-beer/
The meeting closed at 2:30pm.