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Licensed manufacture or storage of unreported alcohol

Your obligations when your business manufactures or stores dutiable excisable alcohol.

Last updated 8 June 2023

Reporting excisable alcohol

We know that most businesses do the right thing. However, some businesses that manufacture or produce excisable alcohol, or store underbond excisable alcohol, don't report all the excisable alcohol products they are required to.

Excisable alcohol is 'underbond' while it is subject to our control. Our control ceases when excisable alcohol has been delivered into the Australian domestic market, exported or a remission has been applied.

The alcohol is no longer underbond in these following examples:

  • the product has been delivered into the Australian domestic market for home consumption under a periodic settlement permission
  • a remission has been applied in relation to product that was unfit for human consumption
  • you have applied the Excise remission scheme for manufacturers of alcoholic beverages) (Remission scheme) subject to meeting the eligibility criteria.

Selling illicit alcohol is illegal and unfair to other businesses who are doing the right thing.

Excise manufacturer licence obligations

If we grant you an excise manufacturer licence, you have obligations that you must meet, including:

  • keeping proper records of all excisable alcohol you manufacture, produce or store under your licence
  • reporting on your excise return the full and correct amount of all excisable alcohol you enter into the Australian domestic market
  • paying the full and correct amount of excise duty for all excisable alcohol you manufacture at the correct time, where the automatic remission available under the Remission scheme doesn't apply. (For example, because you are not an eligible manufacturer or you have reached the threshold.)

Keeping records and reporting

If we grant you an excise storage licence, you must:

  • keep proper records of all excisable alcohol you store under your licence
  • report on your excise return and pay the full and correct amount of excise duty on all excisable alcohol you store and then enter into home consumption at the correct time.
Start of example

Example: bonus stock

Spirit Manufactory is a business that holds an excise manufacturer licence and manufactures spirits. It sells bottles of spirits it has manufactured to a retail bottle shop, Spirit Retail, and includes a significant amount of ‘bonus stock’. Spirit Manufactory is not entitled to an automatic remission under the Remission scheme.

Spirit Manufactory gives an invoice for the sale to Spirit Retail. While the price of the product on the invoice appears to include excise duty, the quantity of product on the invoice is significantly less than what was supplied because the invoice does not include the bonus stock. Spirit Manufactory only reports and pays excise duty on the volume of invoiced product and not on the bonus stock.

By providing the bonus stock, Spirit Manufactory is able to sell the product to the retailer at a cost for the total supply that is less than the amount of the excise duty component of the supply.

Spirit Retail is then able to sell the product to consumers at a discount, while still making a profit.

This is an offence under the Excise Act 1901 that has been committed by both the:

  • licensed manufacturer
  • retailer.

Various offences and consequences could apply in this situation.

Penalties may include having to pay up to 5 times the amount of duty that would have been payable or criminal prosecution.

End of example

For more information, see Excise on alcohol.