House of Representatives

Excise Amendment (Alcoholic Beverages) Bill 2000

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Reforming the Taxation of Alcoholic Beverages

Outline of Chapter

1.1 This Chapter explains amendments to the Excise Act 1901 (Excise Act ) which will give administrative support to the Government's tax reform measures for alcohol.

Context of Reform

1.2 As a result of the removal of wholesale sales tax (WST) from 30 June 2000, the Government foreshadowed in Tax Reform: not a new tax, a new tax system that excise duty rates for alcohol would rise to offset the removal of WST. In addition, all Australian made alcoholic beverages other than those which are subject to the Wine Equalisation Tax (WET) will be brought within the Excise regime. To implement these changes, a package of legislative changes will be introduced in 4 stages:

amendments to the Excise Act (in this Bill) to give effect to the administrative arrangements for the collection of excise for alcoholic beverages not currently subject to excise;
alteration to the Excise Tariff Act 1921 (Tariff Act) by proposal to include all Australian made alcoholic beverages (other than those subject to the WET) in the Schedule to the Tariff Act, and to adjust the tariff rates of alcohol products to offset the removal of the WST. This proposal will be tabled in Parliament before the end of the financial year;
amendments to the Excise Regulations to extend the licensing provisions and other requirements to alcoholic beverages not previously subject to excise; and
a Bill amending the Tariff Act to incorporate the changes made by the Tariff proposal will be introduced later in the year.

Summary of New Law

1.3 The inclusion of a definition for 'other excisable beverages' will bring within the Excise regime all Australian made alcoholic beverages other than those subject to the WET. It also provides a clear link between the administrative provisions of the Excise Act, and the Tariff Act, which imposes excise duty on certain goods, including alcohol.

1.4 New provisions will extend manufacturing options and prevent the double taxation of certain imported products. This will allow excisable and customable goods to be used, together or separately, in the manufacture of excisable goods.

1.5 Some administrative amendments will provide control over the bottling process of products such as designer drinks and alcoholic sodas which will become subject to excise.

1.6 Provision is also made to give the Chief Executive Officer of Customs (CEO) authority to permit certain alcoholic beverages to be entered into home consumption in bulk containers, in place of current provisions which are prescribed by regulation, and for this decision to be reviewable by the Administrative Appeals Tribunal (AAT).

Comparison of key features of new law and current law

1.7 The following table shows the comparison of the key features of the new law and the current law, after the passage of this Bill and the tabling of the Excise Tariff proposal in Parliament in June 2000.

New Law Current Law
All Australian made alcoholic beverages other than those subject to WET will be included within the Excise regime. Only certain alcoholic beverages such as beer, spirits, and liqueurs are subject to Excise.
Excisable goods or customable goods may be used together or separately in the manufacture of excisable goods (in prescribed cases and subject to prescribed conditions). Excisable goods and customable goods may be used together in the manufacture of excisable goods (in prescribed cases and subject to prescribed conditions).
Spirits and other excisable beverages (as defined) may not be entered for home consumption in bulk containers. Only spirits may not be entered for home consumption in bulk containers.

Detailed Explanation of New Law

1.8 Item 1 changes the wording of the definition of a bulk container in subsection 4(1) from a container with a capacity of more than 2 litres of spirit, to a container with a capacity of more than 2 litres of liquid. This amendment is required to extend to 'other excisable beverages' the conditions for entry for home consumption set out in subsections 58(4) and (5).

1.9 Item 2 inserts the new definition 'other excisable beverage' into subsection 4(1). An 'other excisable beverage' will have the same meaning as proposed to be inserted in the Tariff Act. This will provide a link between the Tariff Act, which imposes excise duty on certain goods including alcohol, and the Excise Act and Regulations, which provide the regulatory and administrative framework for the collection of excise.

1.10 Item 3 inserts the words "other than subitem 2(H)" after item 2 in the definition of spirit in subsection 4(1). This removes any ambiguity between 'other excisable beverages' classified to subitem 2(H), and 'spirits' classified to the other subitems of item 2.

1.11 Item 4 substitutes the word "or" for the word "and" in the words "Excisable goods and goods liable to duties of Customs". Item 5 inserts the words "or both excisable goods and goods liable to duties of Customs" into section 24. These amendments will allow the use of imported goods in the manufacture of excisable goods without the current limitation that the imported product must be used with like excisable goods. The amendments have been precipitated by the need to cater for hybrid ready to drink (e.g. a blend of imported spirits, fortified Australian wine and flavourings) alcoholic beverages which have emerged in the market place in recent times. These amendments prevent double taxation of the imported spirit content.

1.12 Item 6 inserts the words "or other excisable beverage" after each occurrence of the word spirit within subsections 58(4) and (5). This amendment minimises the risk to the revenue by ensuring that the bottling of all excisable beverages is conducted under Excise control. The amendment also provides consistency in the treatment of spirits and other excisable alcoholic beverages under subsections 58(4) and (5).

1.13 Item 7 substitutes the words "the CEO approves in writing" for the words "is from time to time prescribed" in paragraph 58(5)(a). This will allow the CEO the flexibility to approve entry in bulk containers without the need to amend regulations each time a new volume container is approved.

1.14 Item 8 inserts new paragraph 162C(1)(ca) to include a decision of the CEO made in respect of the entry of bulk containers of certain alcoholic beverages as a decision that may be reviewed by the AAT.


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