Calculating theoretical WET payable
The theoretical WET payable is calculated by applying the WET rate of 29% or by applying WET using the half-price retail method to an estimate of total assessable wine dealings in Australia.
To calculate theoretical WET payable, we:
- Determine the value of wine sold in Australia by domestic wine makers and the value of wine imported for domestic consumption using ABS wine industry data.
- Multiply the volume of Australian wine sales by domestic winemakers by the wine price index (from the ABS Consumer Price Index data) to smooth the final value of wine sold in Australia by domestic wine producers.
- Adjust the value of wine sold to exclude wine used for WET-free activities or used in manufacturing. Estimates are determined using ABS Australian National Accounts data.
- Split the value of wine sold between the proportion of domestic wine sales sold through wholesalers, retailers and other direct-to-customer methods (cellar door sales). The proportion of wine sold through each channel is calculated using IBISWorld industry reports.
- Apply a wholesale mark-up to each of the three channels to estimate the total wholesale value of total assessable wine dealings in Australia.
- Adjust the value of wine imports for customs duty, and transport and insurance, and then apply the importer mark-up to arrive at an assessable value.
This produces an estimate of the theoretical WET payable.
A diagrammatic summary of these steps is provided below.
Steps to estimate theoretical WET payable