Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)Chapter 14 Increase in wine equalisation tax producer rebate
Outline of chapter
14.1 Schedule 14 to this Bill explains the amendments to the A New Tax System (Wine Equalisation Tax) Act 1999 that will increase the maximum amount of wine equalisation tax (WET) producer rebate a wine producer (or group of producers) is able to claim in each financial year. These amendments commence from 1 July 2006.
Context of amendments
14.2 In the 2004-05 Budget the Government announced the introduction of the WET producer rebate scheme. The scheme commenced on and from 1 October 2004 to provide assistance to each wine producer (or group of producers) of up to $290,000 in WET rebates per annum.
14.3 The Government announced in the 2006-07 Budget that it will provide enhanced assistance to the wine industry from 1 July 2006 through the WET producer rebate scheme.
Summary of new law
14.4 From 2006-07, each wine producer or group of wine producers will be able to claim up to $500,000 in WET rebates each year.
Comparison of key features of new law and current law
| New law | Current law |
| A wine producer or group of producers will be able to claim up to a maximum of $500,000 in WET producer rebates each financial year. | A wine producer or group of producers is able to claim up to a maximum of $290,000 in WET producer rebates each financial year. |
Detailed explanation of new law
14.5 Division 19 of the A New Tax System (Wine Equalisation Tax) Act 1999 governs entitlement to a WET producer rebate.
14.6 Section 19-15 of the A New Tax System (Wine Equalisation Tax) Act 1999 provides for calculation of the amount of WET producer rebate that a wine producer or group of producers may claim in a financial year. Under this provision, the maximum amount claimable in a financial year will be $500,000, reflecting the increased annual threshold. [Schedule 14, items 1 and 2 ]
14.7 Section 19-25 of the A New Tax System (Wine Equalisation Tax) Act 1999 imposes a liability on each producer that is a member of a group of producers, for the repayment of claims in excess of the amount to which the group was entitled. This section extends and clarifies the liability rules to an 'associated producer' (as defined in the legislation) of another producer in a group of producers, where the group claims more than the maximum rebateable amount in a financial year. The specified maximum rebateable amount will be the new amount of $500,000. [Schedule 14, item 3]
14.8 The increase to $500,000 in the maximum amount of producer rebates a producer (or group of producers) can claim in each financial year will not affect the current eligibility or claiming rules for WET rebate claimants, and the administration of a WET producer rebate as a wine tax credit will continue.