Welcome
No conflicts of interest were declared. Attendees were reminded to declare any conflicts that may arise during discussions.
Integrity declarations have been completed by all non-government attendees. Attendees were asked to highlight any issues considered sensitive or confidential during discussions.
2025–26 reflections – compliance focus areas for 2026–27
Wine equalisation tax
The wine equalisation tax (WET) program is broadly operating as intended with a stable population of approximately 3,900 taxpayers and net annual collections exceeding $1 billion. There are generally high levels of voluntary compliance across the sector. The 2022–23 WET gap estimate was 4.3%, $50.6 million indicating that the Australian Taxation Office (ATO) was collecting approximately 96% of the expected tax. The gap has been stable since the introduction of the 2018 WET new integrity measures. The ATO welcomed industry feedback on any risks that we may not be aware of or potential compliance issues.
The 2025–26 compliance focus was business activity statement (BAS)related fraud however attempts using the WET label were minimal. Strong controls are now in place, and monitoring will continue during 2026–27 to detect any new fraud attempts.
The ATO will continue the ‘new to WET’ assistance program for new registrations to assist those entering the system to understand their obligations, particularly record-keeping, knowing when WET applies and appropriate claiming of the producer rebate. Risk assessments are carried out with a small number of WET clients selected for review.
Previously the ATO had referred to expansion of a data matching capability to explore greater use of Australian Border Force (ABF) import data for those quoting at the border and effectively deferring WET. This would then be matched to ATO systems of those acquitting their WET liability. This will be a focus for 2026–27.
The increase in the producer rebate cap from $350,000 to $400,000 took effect from 1 July 2026 and while it is too early to advise of any impact or extent of use, the ATO will monitor claims.
Members discussed issues around 'boundary' products, particularly some ready to drink (RTDs) which are assessable under WET but may be pushing the boundary into the category of 'other excisable beverages', attracting a higher excise rate. We advised that these are typically dealt with on a case-by-case basis, noting widespread innovation in the sector. Where industry have concerns about a particular product, they can flag those concerns at the Tax Integrity Centre tip-off web page (QC 16789). The wine industry has been conducting a road show which includes information about classification issues, that is, what might be considered a wine product for the purposes of alcohol excise or WET.
Alcohol excise
Outside of illicit alcohol behaviours, the alcohol excise system is operating as intended with strong levels of willing participation across:
- manufacturers
- producers
- brewers
- distillers
- importers.
Industry engagement remains strong with lots of early engagement from taxpayers, particularly in relation to exploring the correct tax treatment of innovative new products or processes. The ATO’s focus is on supporting compliant businesses, ensuring compliance with regulatory obligations while targeting non-compliant activities that undermine a level playing field.
Alcohol excise revenue has shown steady growth over the last decade driven by production volumes and the impact of rate indexation. Growth or change in product categories/mix also impacted collections.
The most recent published alcohol excise tax gap was in 2023–24 at 9.7%, $867 million. The primary driver of the gap is illicit alcohol activities involving unlicenced manufacturers, unpaid or under-reported excise, as well as product diversion and supply chain leakage. Our focus continues on early engagement and prevention activities to support willing participation.
While the tax gap calculation is based on intelligence from ATO and other Commonwealth and State law enforcement agencies, the gap itself has a low reliability due to fundamental challenges of estimating excise evasion from those intentionally operating outside the system. Tax gap estimates are subject to annual revision, so previously published estimates may change as the refreshed estimates take account of new information.
Our 2026–27 compliance strategy will focus on maintaining integrity in licensing and ensuring licence holders and their associates meet the fit and proper person requirements. Key priorities include:
- providing advice and guidance in complex areas
- strengthening governance
- record-keeping
- stock control practices.
Compliance activities will continue to be driven by risk-based, data-led intelligence. A recent enhancement is the expansion of data-matching capabilities to compare ATO excise data with bulk ethanol supply information. This will help us identify discrepancies between ethanol purchases, excise payments, and movement permissions, as well as detect potential misuse of the alcohol manufacturers remission (AMR) scheme, such as where high-strength spirit is sourced, rebottled or infused without the necessary distillation step, and the AMR applied incorrectly.
A strong compliance focus continues on the integrity of the AMR. Current and planned activities are considering compliance with the eligibility criteria such as:
- legally and economically independent, particularly regarding shared premises or common ownership
- still ownership
- contract arrangements
- business models described as aggregating or 'cap shopping'.
Several compliance cases have already identified entities that are not genuinely operating as separate alcohol manufacturers and were established primarily to access additional AMR caps. Results to date include assessments issued with liabilities, in one case $748,000 and $186,000 in another. Further action is underway, with outcomes expected to be finalised during 2026–27. The ATO will be happy to review commentary on how data is used to improve compliance for inclusion in industry association articles.
Members noted an increase in liquidation and or bankruptcies in the alcohol excise sector, with tax liabilities being a factor, and with several taxpayers not having visibility of their debt. Also noted was an increase in the number of requests from smaller distillers and others in relation to holding under bond goods.
Members commented on a perceived change in how excise licences are granted, noting a lack of site visits prior to a licence being granted. Generally, where applicants meet the requirements of section 39A of the Excise Act 1901, a licence will be granted. Licence refusal comes with objection rights to progress further. The ATO’s 2026–27 compliance includes a focus on integrity in the licensing system.
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Item 09072026-3-1 |
Australian Grape and Wine (AGW) Roadshow |
|---|---|
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Status |
In progress |
|
Responsibility |
Michael Hughes, ATO |
|
Description |
Liaise with AGW to discuss the roadshow presentation. |
|
Item 09072026-3-2 |
Potential gaps in regulation of warehouses |
|---|---|
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Status |
In progress |
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Responsibility |
Michael Hughes, ATO |
|
Description |
Contact Mainfreight to discuss current environment in relation to warehousing to identify potential gaps or opportunities to be explored in regulatory requirements. |
Illicit alcohol
Illicit alcohol behaviour has been an ATO focus for several years, noting the growing interest following recent incidents in Victoria and the potential involvement of organised crime that has been encountered with illicit tobacco activities.
While the media have drawn parallels with the illicit tobacco sector, the ATO is conscious of the risks associated with illicit alcohol and affirmed its commitment to exploring what more can be done now to address this.
We remain focused on identifying and addressing deliberate non-compliance and are committed to minimising impacts on legitimate businesses.
Illicit alcohol activity can take many forms, including unlicensed manufacture and supply outside the regulatory system. Detecting these operators is challenging because they often operate without licences, records, or clear business identifiers. The type of illicit or fraudulent activity also evolves and changes over time, resulting in illicit alcohol activities emerging at the border, in addition to domestic activities. The ATO relies heavily on intelligence gathering, including:
- retailer visits
- examination of products and labelling
- supply chain tracing.
Illicit alcohol is increasingly being identified within hospitality and event supply channels, creating additional compliance challenges.
The ATO is working closely with state law enforcement agencies, liquor licensing authorities, ABF, and other regulators to disrupt illicit alcohol activity. Rather than relying on a single enforcement approach, our strategy involves multiple coordinated actions across the regulatory system. Partnership with Victoria Police continues, with similar collaboration expanding in South Australia and Queensland. We are keen to gain any insights from industry about where there may be opportunities to leverage various compliance activities.
Enhanced data capabilities, including bulk ethanol data matching, are strengthening our ability to identify high-risk operators. Recent compliance activities have resulted in assessments worth tens of millions of dollars, removal of high-risk operators from the market, and the seizure and destruction of approximately 45,000 litres of illicit alcohol representing around $2.8 million in excise duty. We continue to encourage industry to help combat illicit alcohol by reporting suspicious products, unusual manufacturing activities, and supply chain concerns through ATO tip-off channels. We can share information with industry for messaging of consequences of illicit behaviours, as well as consider opportunities for messaging from other regulatory providers, for example, the health consequences that may impact retailers if illicit product were found.
Members referred to fraudulent application of the AMR contributing to illicit alcohol activities. The ATO noted alcohol products where the excise duty has not been paid, as well as alcohol that has been subject to the AMR can both contribute to cheap alcohol in the retail market. Further work will be undertaken to understand where non-compliant application of the AMR is occurring to ensure taxpayers are complying with the law.
Industry queried the amount of resourcing on illicit alcohol activities, as well as levels of methanol detected by alcohol product testing. The ATO has been focusing resources on illicit alcohol over several years and noted that due to the complexity of some business arrangements, these cases take time to finalise. We recognise the benefits of joint activities with ABF, state law enforcement and liquor licensing agencies, and have been building these relationships with over several years in relation to illicit alcohol. As part of 2025–26 compliance activities, we continued retailer visits to help educate retailers in understanding their obligations, as well as gathering intelligence on products being sold. Since 2019, we have visited approximately 420 retailers across Victoria, Queensland, NSW and South Australia.
While methanol has not been detected in recent product testing, historically we have seen products with higher levels of alcohol by volume not normally found in a potable beverage.
Technical advice
An update about the outstanding action item was provided. While there has been progress, the customs entity level licensing form is not yet finalised. It allows for multiple sites to be listed on one licence. The ATO and ABF will continue progress on it, including sign off by the ABF Commissioner, with the intention to finalise it in the next couple of months. We will notify the group as soon as practicable if there is a revision to that expected timing.
The following current determinations that help and provide certainty to industry are progressing:
- Draft Excise Determination ED 2024/D2 Alcohol excise: the addition of water and the integral attributes of beer for the purposes of the Excise Tariff Act 1921
- Draft Wine Equalisation Tax Determination WETD 2024/D1 Wine equalisation tax: the addition of water to cider or perry.
As the ATO works to formalise a view, existing practices and processes being used by industry can continue. The delay to finalise these is due to the complexity of issues and the wide range of representations received. We are considering how those representations can be reflected in the final view.
The ATO is aware of concerns raised about the potential impacts on the outsourcing of canning and carbonation on eligibility for the AMR. This relates to whether mere carbonation is considered to be manufacture for excise purposes. There is no current ATO view.
The current ATO view on manufacture across a range of product scenarios, ER 2012/1 does not include carbonation. We are actively exploring if there is scope for a pragmatic approach to be adopted to ensure that AMR operates as intended for legitimate business activities. The group will be consulted with as this guidance is developed.
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Item 09072026-5-1 |
Customs entity level licensing form |
|---|---|
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Status |
In progress |
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Responsibility |
Anthony Barnard, ATO |
|
Description |
ATO and ABF to finalise the customs entity level licensing form in the next couple of months or notify the stakeholder group as soon as practicable of a revision to that expected timing. |
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Item 09072026-5-2 |
Draft excise and WET determinations |
|---|---|
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Status |
In progress |
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Responsibility |
Nathan Lindemann, ATO |
|
Description |
ATO to provide a status update on progress of the draft excise and WET determinations to members in September 2026. |
Member roundtable
Treasury advised that it is aware of issues raised by stakeholders and media in relation to illicit alcohol activities, the remission scheme and industry’s keen interest in the beer and cider determinations. Treasury is working with the ATO on these issues.
Over the last year, legislation has passed for 3 components of the 2025–26 budget measure to support the hospitality sector including:
- Excise Tariff Amendment (Draught Beer) Bill 2025 paused the automatic, consumer price index (CPI) linked biannual increases on draught beer excise from August 2025 until August 2027. This freeze applies specifically to beer poured from kegs between 8 and 48 litres (and larger), providing direct tax relief to pubs, clubs, and hospitality. This, and related Customs legislation, received Royal Assent on 8 April 2026.
- Legislation for the increase in the cap for the producer rebate for WET from $350,000 to $400,000 received Royal Assent on 26 March 2026. These changes took effect from 1 July 2026, noting that regulation for the increase to the AMR cap of the same amount has been registered in November 2025.
ABF noted that it is actively involved in identifying, targeting and risk analysis within the illicit alcohol environment. ABF efforts are focused on targeted compliance, enforcement activities and investigations aimed at detecting, disrupting and prosecuting alcohol related customs and revenue fraud at the border. The Department of Home Affairs through ABF, provide regular updates to support the ATO’s analysis and reporting of the alcohol tax gap.
Industry stakeholders reported ongoing challenges from:
- inflation
- rising operating costs
- excise indexation
- broader cost of living pressures impacting both businesses and consumer demand.
Across the sector, members noted a decline in alcohol consumption generally and a shift in consumer preferences to lower alcohol and lower priced products. A growth in RTDs had been noted.
Industry stakeholders expressed concern regarding the growth of illicit alcohol, noting that relentless rate increases driven by CPI indexation are actively fuelling this illicit trade, with aspects of the AMR considered as potential drivers of this behaviour. Industry members support ATO efforts to identify and treat illicit alcohol risks, but express concerns that future excise rates could result in illicit alcohol trade at a scale seen in the tobacco market. The ATO reminded stakeholders of ATO tip off channels to help address these shadow economy behaviours.
Members noted illicit alcohol behaviours becoming evident at the hospitality level of the market and suggested potential work be carried out around consideration of what is acceptable in terms of movement permissions and bulk containers, particularly where large containers are delivered to hospitality venues. Instances of exported product being returned into the market is also being seen. Issues in the ethanol sector mainly relate to consumers wishing to purchase ethanol with no permit in place.
Members noted the impact of the AMR on industry and the need for government to ensure the remission was meeting the policy intent and not negatively impacting compliant businesses, particularly with the recent increase in the AMR threshold.
The wine sector noted broader economic pressures coming from a decline in wine sales globally. This ongoing downturn, combined with the difficult operating environment more broadly, is taking a significant toll on mental health across the sector. Increasing water prices domestically are an additional factor for industry. The industry advised of a mandatory code of conduct for winegrape purchases being introduced in 2027.
Several members referred to the importance of ensuring a level market playing field and are anticipating the finalisation of beer and cider determinations to assist in providing more clarity around product classification. Alignment of product treatment from the Excise Act and Customs Act is important to business. Concerns were expressed around the delays on finalisation of the determinations and the customs licence form, and the impacts on business.
Members acknowledged the value of these meetings by providing a forum for industry discussion.
Other business
As part of governance for stakeholder groups, the charter is required to be endorsed annually. The 2025 charter was provided in meeting papers for consideration, and the 2026 charter will be distributed to members with the minutes from this meeting.
Post meeting update – No comments were received from members, and the updated charter will now carry over until the 2027 annual meeting.
Members were advised that references to QC page numbers in messaging are to mitigate risks of scam/malicious links. Entering the QC number in the search section on ato.gov.au will provide the appropriate webpages.
Indexation of excise duty rates for alcohol will occur on 3 August 2026 with the updated rates published in the afternoon of 29 July 2026. An email will be issued to members, and the updated rates will be published on ato.gov.au, QC 63605.
Attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Anthony Siouclis, (Chair), Small Business |
|
ATO |
Anthony Barnard, Small Business |
|
ATO |
Bennett Sandhu, Small Business |
|
ATO |
Brian Geovanovich, Small Business |
|
ATO |
Claudia Bianco, ATO Corporate |
|
ATO |
Jared Willoughby, Small Business |
|
ATO |
Kimley Vacher, Small Business |
|
ATO |
Liana Penna, Small Business |
|
ATO |
Michael Brooks, Small Business |
|
ATO |
Michael Hughes, Small Business |
|
ATO |
Nathan Lindemann, Small Business |
|
ATO |
Rufina Maurovic, Small Business |
|
ATO |
Sally Fonovic, Small Business |
|
ATO |
Tuyen Kieu, Small Business |
|
Alepat Taylor |
Frank Ciampa |
|
Angove's Proprietary |
Bob Smart |
|
Asahi Group Holdings |
Paul Jackson |
|
Australian Border Force |
Charitha Adikari Arachchi |
|
Australian Border Force |
Latha Reardon |
|
Australian Distillers' Association |
David Ridden |
|
Australian Grape and Wine Incorporated |
Anna Hooper |
|
Campari Australia |
Robert MacKenzie |
|
Cider Australia |
Warwick Billings |
|
Coca Cola Europacific Partners |
Karen McCoy |
|
Coopers Brewery |
Brad Grunert |
|
Coopers Brewery |
Daniel Davila |
|
Diageo Australia |
Prathish Seevaratnam |
|
Endeavour Group Limited |
Priyanka Nagpaul-West |
|
Good Drinks Australia |
Phil McClintock |
|
Lion |
Sonja Icanovski |
|
Mainfreight Warehousing |
Andrew Robinson |
|
Manildra Group |
Maree Hotchkiss |
|
Metcash |
Paul Onley |
|
Samuel Smith and Son |
Vanessa George |
|
Spirits Council of Australia |
Steven Fanner |
|
Suntory Beverage and Food Australia |
Victor Yee |
|
Treasury |
Caitlin Payne |
|
Treasury |
Jesse Yu |
|
Treasury |
Juyeon Lee |
|
Treasury |
Leann Duff |
|
Treasury |
Liz Jaspers |
|
Treasury |
Richard Maher |
|
Treasury Wine Estates |
Catherine Dishon |
|
Vok Beverages |
Rebecca Tolhurst |
|
Wilmar BioEthanol |
Travis Hardy |
Apologies
|
Organisation |
Member |
|---|---|
|
Aldi Stores |
Adam Willacy |
|
Brewers' Association of Australia |
Sarah Lovett |
|
Brown-Forman Australia |
Jorge Jiminez |
|
Coles Financial Services |
George Nikolaou |
|
Independent Brewers' Association |
Sabrina Kunz |
|
Tarac Technologies |
Robert Pelton |
|
Wine Australia |
Ned Hewitson |