Determining classification of beer and cider
Our draft determinations are intended to help alcohol producers correctly decide the classification of their alcoholic beverages:
- 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.
They set out the Commissioner’s preliminary but considered view of the law and apply equally to manufacturers of both new and existing alcoholic beverages.
The draft determinations have not been finalised as we continue to consider issues raised from our community consultation. We expect them to be finalised by the end of 2025.
Our view on beer
According to our view in ED 2024/D2, certain alcoholic beverages produced from a beer base, but which are not ultimately sold as a beer and are instead intended to be consumed as an alcoholic seltzer or ready-to-drink (RTD)-type product, are not subject to excise at beer rates.
This means that beer-based seltzers and beer-based RTDs that are heavily diluted with water or other substances and produced in a way that strips the beverage of its beer-like characteristics are more likely to be taxed as another excisable beverage under our view in the draft determination.
Our view on cider
According to our view in WETD 2024/D1, certain alcoholic beverages produced from the fermentation of apple or pear juice or must, that are heavily diluted with water or other substances after fermentation, may not satisfy the cider definition in the A New Tax System (Wine Equalisation Tax) Act 1999 and are more likely to be taxed as another excisable beverage.
Applying the ATO's view
If the ATO is requested by producers to provide specific advice about beverage classification before these draft determinations are finalised, we will apply the view in the draft determinations in relation to deciding whether a beverage satisfies the definition of beer or cider in the excise or wine equalisation tax law.
In the meantime, producers can continue to self-assess their products for alcohol taxation purposes under the law. Changes to systems and business practices will not be necessary until the determinations have been finalised.