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Excise guidelines for the alcohol industry

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ABOUT THIS GUIDE

This guide is intended to be a reference tool for the alcohol industry to assist its members to meet their excise obligations. It contains information about the excise system and how it applies to alcohol and alcohol products that are manufactured or produced (hereafter the reference to 'manufacture' or 'manufactured' is a reference to 'manufactured or produced', 'manufacture or produce' or 'manufacture or production' having regard to the relevant context unless otherwise specified) in Australia.

The guide will provide you with a broad outline of excise law and your compliance obligations - it does not cover every aspect of how excise law applies to every situation.

Throughout this guide you will find important notes (look for the exclamation symbol) that will help you with key information you should note.

You will also find 'more information' boxes (look for the right direction symbol) that will show any further steps you may need to take or supplementary information you may need to refer to.

The 'danger' notes (look for the danger symbol) give prominence to information that is critical to compliance. They suggest the highest level of urgency or facts you must comply with.

If this guide does not fully cover your circumstances, please seek help from us or a professional adviser.

You can contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office

PO Box 3514

ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days and finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

TERMS WE USE

When we say you, we mean you as a member of the alcohol industry who is either registered or wishes to register for excise.

Some technical terms used in this guide may be new to you - some are defined in the legislation, others are not. They are shown in bold when first used and are explained at the end of that chapter.

The terms CEO, Collector, and Commissioner are all used in the legislation in reference to various officers. In most instances in this guide we have not used these specific terms and simply refer to 'us' or 'we'.

OUR COMMITMENT

The information in this publication is current at June 2021.

This publication is an expression of the Commissioner's opinion on the operation of the Excise Act 1901 and Excise Tariff Act 1921 as they relate to alcohol. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953.

Since we regularly revise our publications to take into account any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au

01 INTRODUCTION

1.1 PURPOSE

1.2 WHAT IS EXCISE?

1.3 OVERVIEW OF EXCISE LEGISLATION

1.3.1 Excise Tariff Act

1.3.2 Excise Act

1.3.3 Excise Regulations

1.4 WHO ADMINISTERS EXCISE?

1.5 WHEN AM I INVOLVED IN THE EXCISE SYSTEM?

1.6 WHAT DO I DO IF I NEED MORE INFORMATION?

1.7 TERMS USED

1.8 LEGISLATION (quick reference guide)

1.1 PURPOSE

This chapter deals with:

  • what excise is
  • an overview of excise legislation relevant to alcohol
  • who administers excise, and
  • when you are involved in the excise system.

It provides a general introduction to excise as it relates to alcohol products.

Further detail on the matters discussed is contained in later chapters.

1.2 WHAT IS EXCISE?

The Commonwealth of Australia Constitution Act (the Constitution) provides that only the Commonwealth can impose duties of excise.[1]

The Constitution also provides that laws imposing taxation (and excise is a tax) shall only deal with the imposition of tax. The Excise Tariff Act 1921 (Excise Tariff Act) imposes excise on relevant goods manufactured[2] in Australia and the Excise Act 1901 (Excise Act) deals with administrative arrangements applying to the excise system.

In Ha & Anor v. State of New South Wales & Ors; Walter Hammond & Associates Pty Limited v. State of New South Wales & Or[3]s (Ha), the High Court explained a duty of excise as follows:

... duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin. Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods.[4]

Excise is imposed by the Excise Tariff Act on goods dutiable under the Schedule to that Act and manufactured in Australia. It can be seen that this clearly fits the definition of duty of excise as described by the High Court in the Ha case.

1.3 OVERVIEW OF EXCISE LEGISLATION

The principal legislative framework for the excise system, relating to alcohol, is contained in the:

  • Excise Tariff Act 1921 (Excise Tariff Act)
  • Excise Act 1901 (Excise Act), and
  • Excise Regulation 2015 (Excise Regulation).

To change the Excise Tariff Act requires an amending Act to be passed through Parliament. There are parliamentary procedures which allow for the modification of the Excise Tariff so that the changes can be implemented immediately. These procedures are known as tariff proposals.

For more information on tariff proposals refer to 'Section 1.3.1 Excise Tariff Act' of this guide.

1.3.1 Excise Tariff Act

There are three key provisions in the Excise Tariff Act that operate to:

  • impose excise duty
  • identify excisable goods and the applicable duty rates (the Schedule), and
  • index the duty rate.

Imposition of Excise Duty

Section 5 of the Excise Tariff Act imposes excise duty on goods that are dutiable under the Schedule to the Act and manufactured or produced in Australia. Excise duty is imposed at the time of manufacture of the relevant goods. The Schedule lists the various goods that are subject to excise and the rate of duty applicable. It is sometimes referred to as the Excise Tariff.

The definition of manufactured or produced

The term 'manufacture' is defined in section 4 of the Excise Act and includes all processes (that is, operations or actions) used in the manufacture of excisable goods. The definition in the Excise Act is an inclusive one, that is, it includes some processes that might otherwise not generally be considered as manufacture. 'Produce' is not defined in the Excise Act or the Excise Tariff Act.

The Commissioner's view on the meaning of 'manufactured or produced' is set out in Excise Ruling ER 2012/1 Excise: the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts.

The phrase 'manufactured or produced' for the purposes of the Excise Act and Excise Tariff Act, requires that something new or different results from a process.

It will be a question of fact and degree as to whether the end product constitutes a new or different thing from that out of which it was made or results. This involves a process of evaluating and weighing a range of factors for the particular circumstance.

The Commissioner considers that the factors that may be taken into account in determining whether a new or different thing has been manufactured or produced for excise purposes include:

  • The thing did not previously exist. The parts have been combined to form a thing that is distinct (for example, commercially distinct) from that out of which it is made.
  • The thing that is brought into existence has new or different qualities, properties or combinations thereof from that out of which it is made or derived. It may be any quality that indicates a difference - qualities such as colour, shape, or chemical composition.
  • A change in form (for example, change from solid to liquid, or liquid to gas) where a new or different thing has resulted from this change - for example it has new qualities, properties or combinations thereof
  • Manufacture or production may involve the application of skill, knowledge or labour to a thing that brings into existence a new or different thing having a distinctive character or use

Having regard to the operation of the excise system, it is considered that the phrase 'manufactured or produced' for the purposes of the Excise Acts requires that something new or different having a distinctive character or use, results from a process, which is captured under the Excise Acts.

This means that 'manufactured or produced' in the sense contemplated by the Excise Acts does not include activities that amount to reasonable steps taken in the course of consuming existing excisable (or excise equivalent) products once they have found their way into home consumption. If the excise legislation has been complied with, appropriate duties will have been paid on the products that have been delivered into home consumption, and the delivery of those products will have been authorised. Any subsequent dealings with those products that are consistent with the manner in which consumption of those products would normally occur, falls outside the scope of the Excise Act.

It will be a question of fact and degree whether, in the particular circumstances, the activities undertaken by a person amount to reasonable steps taken in the course of consuming existing excisable goods. Factors that may be relevant in establishing whether the use of excisable goods that have found their way into home consumption amounts to the manufacture or production of a good for excise purposes include the scale of production, method of production, volume of goods produced and whether the products are used in making other distinct marketable goods. Issues such as quantification, packaging and the application of brand names could evidence the 'marketable' factor.

The Commissioner accepts that the activities where a bartender mixes spirits behind a bar upon a customer's request, will not amount to the manufacture or production of a good dutiable under the Schedule.

The schedule of excisable goods and the duty rates

The Schedule to the Excise Tariff Act includes a table that lists the goods that are subject to excise duty. The goods that are currently subject to excise fall within three broad groups:

  • alcoholic beverages (other than wine) and spirits
  • cigarettes and other tobacco products, and
  • fuel and oils.

Within those three broad groups the schedule provides eight different items and those items are (in most cases) further broken down into subitems. The table contains a description of the items and subitems and provides the rate of duty applicable to them.

The following is the alcohol products section of the table as of 5 August 2019:

 

Tariff Item

Sub item

Unit

Description of Goods

Rate*

 

1

 

 

Beer

 

 

1.1

LAL

Beer not exceeding 3% by volume of alcohol packaged in:

  1. an individual container of less than 8 litres; or
  2. an individual container:
    1. of at least 8 litres but not exceeding 48 litres; and
    2. not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$43.53 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.2

LAL

Beer not exceeding 3% by volume of alcohol packaged in:

  1. an individual container exceeding 48 litres; or
  2. an individual container:
    1. of at least 48 litres but not exceeding 48 litres; and
    2. designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$8.71 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.5

LAL

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. an individual container of less than 8 litres; or
  2. an individual container:
    1. of at least 8 litres but not exceeding 48 litres; and
    2. not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.700 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.6

LAL

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. an individual container exceeding 48 litres; or
  2. an individual container:
    1. of at least 8 litres but not exceeding 48 litres; and
    2. designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$27.26 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.10

LAL

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. an individual container of less than 8 litres; or
  2. an individual container:
    1. of at least 8 litres but not exceeding 48 litres; and
    2. not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.70 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.11

LAL

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. an individual container exceeding 48 litres; or
  2. an individual container:
    1. of at least 8 litres but not exceeding 48 litres; and
    2. designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$35.71 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.15

LAL

Beer not exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.06 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.16

LAL

Beer exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.53 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

2

 

LAL

Other excisable beverages not exceeding 10% by volume of alcohol

$85.87 per litre of alcohol

 

3

 

 

Spirits; Other excisable beverages exceeding 10% by volume of alcohol

 

 

3.1

LAL

Brandy

$80.20 per litre of alcohol

 

3.2

LAL

Other excisable beverages exceeding 10% by volume of alcohol

$85.87 per litre of alcohol

 

 

3.5

LAL

Spirit that:

  1. a person has an approval, under section 77FD of the Excise Act 1901 , to use for fortifying Australian wine or Australian grape must; and
  2. is otherwise covered by the approval

Free

 

 

3.6

LAL

Spirit that:

  1. is for use by a person who is included in a class of persons determined under section 77FE of the Excise Act 1901 ; and
  2. if a quantity is specified in a determination under that section in relation to the person - does not exceed that quantity; and
  3. is for an industrial, manufacturing, scientific, medical, veterinary or educational purpose

Free

 

 

3.7

LAL

Spirit that:

  1. a person has an approval, under section 77FF of the Excise Act 1901 , to use for an industrial, manufacturing, scientific, medical, veterinary or educational purpose; and
  2. is otherwise covered by the approval

Free

 

 

3.8

LAL

Spirit denatured according to a formula determined under section 77FG of the Excise Act 1901 , other than spirit for use as fuel in an internal combustion engine

Free

 

3.10

LAL

Spirits not elsewhere included

$85.87 per litre of alcohol

You can find the current rates of duty, along with those applicable pre 5 August 2019 on our website.

Indexation of the duty rate

The rates of excise are set in the Schedule to the Excise Tariff Act. However, section 6A provides that the rates of duty may increase every six months (generally 1 February and 1 August). The amount of any increase is calculated by reference to the All Groups Consumer Price Index published quarterly by the Australian Bureau of Statistics.

These increases are commonly referred to as indexation. We publish these in the Commonwealth Gazette and, for ease of reference, we provide a 'working tariff' which shows an up to date rate taking account of the indexation increases.

Indexation increases also apply to rates set under a tariff proposal.

Tariff proposals

Tariff proposals are a means of changing the Excise Tariff (rates can be adjusted up or down and products can be added or removed) so that it is effective from the time it is proposed rather than after the enactment of an Excise Tariff Amendment Act. Most of the processes relate to Parliamentary procedures, however, there are specific provisions in the Excise Act that provide for the making of tariff proposals when Parliament is not sitting.

Changes to the Excise Tariff can be notified in the Parliament or, if the Parliament is not sitting, by notice in the Gazette. We then apply the proposal as if it is law.

The tariff proposal is required to be validated by an Act within 12 months giving retrospective effect to the date of the proposal.

You cannot commence proceedings against us for any action taken to collect the amount set by the tariff proposal during the periods specified in section 114 of the Excise Act.[5]

Effectively, this means you need to pay in line with a tariff proposal. Any increases in rates or introduction of new products through a tariff proposal technically does not impose excise, but we will protect the revenue by collecting amounts in line with the proposal.

If an amending Act validating the changes outlined within the tariff proposal is not passed within the prescribed periods, then any additional amounts will be refunded to you.

1.3.2 Excise Act

The Excise Act imposes controls in two main areas:

  • manufacture, storage and movement of excisable alcohol products, and
  • payment of duty for excisable alcohol products.

The Excise Act requires that alcohol not be manufactured outside our control. This is to ensure that the correct amount of duty is ultimately paid or the alcohol is otherwise satisfactorily dealt with. This is achieved by making various activities unlawful and allowing us to grant licences and permission to people to carry on those otherwise unlawful activities.

Manufacture, storage and movement of excisable alcohol products

Before you can manufacture alcohol products you need a manufacturer licence granted under the Excise Act.[6]

Before you can store excisable alcohol products that you did not manufacture you need a storage licence granted under the Excise Act.[7]

Before you can remove excisable alcohol products on which duty has not been paid, you need permission granted under the Excise Act.[8]

Generally we will not grant permission to move excisable alcohol products on which duty has not been paid to a place that is not covered by either a manufacturer licence or a storage licence.

For more information about the excise licensing regime, refer to Chapter 2 - Licensing: Applications.

For more information about movement permissions, refer to Chapter 5 - Movement permissions.

Payment of duty for excisable alcohol products

The Excise Tariff Act imposes duty when excisable alcohol products are manufactured. The Excise Act specifies when the duty must be paid, how and what you must report to us, the relevant time to determine the rate of duty in force, and provides a mechanism to require payment where duty has not been correctly accounted for on excisable alcohol products.

In general terms, duty must be paid on the goods before they are delivered into home consumption (other than being delivered to another licensed premises). Permission may be granted to deliver the goods prior to paying the duty.

For more information about payment of duty refer to Chapter 6 - Payment of duty.

1.3.3 Excise Regulation

The Excise Regulation sets out provisions in relation to excisable goods such as:

  • refunds and remissions, and
  • drawbacks.

For more information about remissions, refunds and drawbacks refer to Chapter 7 - Remissions, refunds, drawbacks and exemptions.

1.4 WHO ADMINISTERS EXCISE?

The Commissioner of Taxation has the general administration of the Excise Act and the Excise Tariff Act.[9] This means you have to deal with the ATO when you are involved in the manufacture or storage of Australian manufactured alcohol products.

1.5 WHEN AM I INVOLVED IN THE EXCISE SYSTEM?

You are involved in the excise system if you:

  • manufacture excisable alcohol products;
  • store or own excisable alcohol products upon which excise duty has not been paid

1.6 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on excise, as it relates to alcohol, contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days and finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

1.7 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

1.8 LEGISLATION (quick reference guide)

In this chapter, we have referred to the following legislation:

1.8.1 Excise Act 1901

Section 4 - Definitions

Section 7 - General administration of Act

Section 25 - Only licensed manufacturers to manufacture excisable goods

Part IV - Manufacturer, storage, producer and dealer licences

Section 61A - Permission to remove goods that are subject to CEO's control

Section 114 - Time for commencing action

1.8.2 Excise Tariff Act 1921

Section 1A - General administration of Act

Section 5 - Duties of excise

Section 6A - Indexation of rates of duty

The Schedule

1.8.3 Commonwealth of Australia Constitution

Section 90 - Exclusive power over customs, excise, and bounties

02 LICENSING: Applications

2.1 PURPOSE

2.2 INTRODUCTION

2.2.1 WHY IS THERE A LICENSING REGIME?

2.2.2 WHAT IS A LICENCE?

2.3 POLICY AND PRACTICE

2.3.1 DIFFERENT LICENCE TYPES

2.3.2 WHAT ARE MY RESPONSIBILITIES AS A LICENCE HOLDER?

2.3.3 WHAT ELSE CAN WE DO?

2.3.4 WHAT RECORDS DO I NEED TO KEEP?

2.3.5 HOW LONG IS MY LICENCE VALID FOR?

2.3.6 IS MY LICENCE TRANSFERABLE?

2.3.7 CAN MY LICENSING INFORMATION BE DISCLOSED?

2.4 PROCEDURES

2.4.1 HOW DO I REGISTER FOR EXCISE?

2.4.2 HOW DO I APPLY FOR A LICENCE?

2.4.3 HOW DO I CHANGE MY LICENCE DETAILS?

2.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?

2.6 TERMS USED

2.7 LEGISLATION (quick reference guide)

2.1 PURPOSE

This chapter deals with:

  • why there is a licensing regime
  • what a licence is
  • different licence types
  • how long a licence is valid for
  • whether licences are transferable
  • disclosure of your licensing information
  • how to register for excise
  • how to apply for a licence
  • how to change your licence details, and
  • penalties that can apply to offences in relation to licences.

2.2 INTRODUCTION

2.2.1 WHY IS THERE A LICENSING REGIME?

The excise duty attached to excisable alcohol products forms a significant component of the overall value of the goods. A licensing regime reduces the risk that the correct amount of duty will not be paid.

2.2.2 WHAT IS A LICENCE?

A licence is an approval or authorisation to enable you to undertake activities as specified in the licence. If you undertake these activities without a licence or contravene your licence you are committing an offence and may be prosecuted.

A licence is issued to a specific entity and specifies the premises where the activities may be undertaken. This may require you to have more than one licence.

Licences can be issued to:

  • individuals
  • partnerships and companies in their own right, and
  • individuals and companies in their capacity as trustees.

There may be different licensing processes depending on the type of entity applying for the licence.

2.3 POLICY AND PRACTICE

2.3.1 DIFFERENT LICENCE TYPES

There are two licence types for excisable alcohol products:

  • Manufacturer
  • Storage

Manufacturer licence

To manufacture excisable goods, the Excise Act requires you to be a licensed manufacturer[10] and that the goods be manufactured at licensed premises in accordance with the conditions specified on your manufacturer licence.[11]

The Excise Act is directed towards controlling commercial operations. It would not be consistent with those controls for the ATO to grant a licence for the production of excisable goods for personal use. In particular, commercial operations would not include home distillation of spirit for personal use.[12]

The ATO does not grant licences to manufacture excisable goods for non-commercial use. While it is okay to make beer or wine (or other fermented beverages) for personal use, it is illegal to use a still of any size to distil spirits for personal use without the appropriate licence.[13]

The Excise Act definition of manufacture includes the manufacture of beer, for non-commercial purposes, using commercial facilities or equipment. This is what occurs at brew on premises shops (BOPS).

BOPS are premises which provide commercial brewing facilities for customers to make beer for their own consumption. Only the operator or proprietor of the BOPS is required to hold an excise licence, even though the customers may be seen to be carrying out the manufacturing activity. For more information regarding BOPS see Chapter 10 - Beer.

Where beer has been entered for home consumption in an individual container that is:

  • greater than 48 litres; or
  • at least 8 litres but not exceeding 48 litres, and is designed to connect to a pressurised gas delivery system (or other system prescribed by the regulations),

and is subsequently repackaged into an individual sealed container that is:

  • less than 8 litres; or
  • at least 8 litres but not exceeding 48 litres, and is not designed to connect to a pressurised gas delivery system (or other system prescribed by the regulations),

this repackaging process is considered manufacture for excise purposes[14] and is required to be done in accordance with a manufacturer licence.

Example 2A

A beer manufacturer XYZ sells duty paid beer in 50 litre kegs to restaurant ABC and restaurant ABC repackages the beer into their own 300 ml bottles for resale within the restaurant. Restaurant ABC is a manufacturer of beer and requires a licence to manufacture beer.

We consider that these common activities in relation to alcohol are manufacture for excise purposes:

  • fermentation (except for wine covered by the wine equalisation tax (WET))
  • distillation
  • the addition of flavours and/or colours (including in-line mixing as part of packaging into bottles, cans or kegs)
  • reduction (adding water)
  • blending*
  • denaturing spirits
  • maturation of spirits in wood, and
  • repackaging of duty-paid beer from bulk containers.

*Specifically in relation to blending spirits, section 77FM of the Excise Act provides that spirit blending to produce spirit constitutes the manufacture of that spirit for the purposes of the Excise Act. A consequence of this section is that where imported high strength spirit is blended in Australia with other high strength spirit the resulting spirit is excisable.

However, subsection 77FM also provides for the Commissioner to specify circumstances where blending of spirits does not constitute manufacture. Excise (Spirit blending exemptions) Determination 2010 (No.1) specifies the following circumstances:

  • The incidental blending of remnant spirit (whether previously entered for home consumption or under bond) within a vessel or container. It is a matter of fact and degree whether the contents of the vessel or container should be regarded as remnants.
  • The blending of spirit that has been previously entered for home consumption under sub-items 3.5, 3.6 and 3.7 of the Schedule to the Excise Tariff Act with like spirit that has also been previously entered for home consumption or another substance by a person who has approval under the Excise Act to use that spirit.
  • The blending of denatured spirit that has been previously entered for home consumption under sub-item 3.8 of the Schedule to the Excise Tariff Act with like spirit that has also been previously entered for home consumption or another substance by an end user.
  • The blending of spirit that has been previously entered for home consumption with like spirit previously entered for home consumption where no skill, knowledge or judgement was used in the blending process and the blending process does not result in the making of a product that is different from its inputs in any way (eg colour, taste or percentage of alcohol by volume).

'Excise manufacturer licences specify the manufacturing activity or activities permitted such as:

  • brewing
  • brew on premises shops (BOPS) operations
  • distillation
  • maturation
  • denaturing of spirit
  • manufacturing other excisable beverages, or
  • any combination of these.

You cannot commence manufacture of excisable alcohol products without a licence. This means that you cannot test your manufacturing equipment or produce samples to market to potential buyers if you do not hold a licence.

Imported alcohol products (other than alcohol which is subject to wine equalisation tax) are subject to customs duty at a rate that is equivalent to the duty on excisable alcohol products (except for an additional ad valorem duty that is payable on certain spirits). If you intend to use imported alcohol products in the manufacture of excisable products[15] you will not need to pay the customs duty (except any ad valorem duty that is payable) if you follow the provisions in the Customs Act.[16]

These guidelines do not address the requirements of the Department of Home Affairs, however, in general, the provisions provide that if your premises are specified in an excise manufacturer licence and also in a Customs warehouse licence you can enter the imported alcohol products for warehousing and then use the imported alcohol products to manufacture excisable goods. The liability to pay the customs duty on the imported alcohol products is extinguished (except for any ad valorem duty that is payable) upon the manufacture of excisable goods. You will then be liable to pay excise duty on the excisable alcohol products.

You can only manufacture goods at the premises specified in your licence.[17] We may also give you written directions in regard to what parts of your factory any manufacturing process is to be carried on and where inputs used in manufacture, and excisable alcohol products, respectively, are to be kept.[18]

Storage licence

If you have a manufacturer licence and wish to store your excisable alcohol products underbond at a place that is not specified in your licence you will require a separate storage licence for that place.

If you are in the business of wholesaling and distribution you may wish to store underbond excisable alcohol products, whether owned by you or someone else. In either case, you would require a storage licence.

Even if you are not the owner of the excisable alcohol products, you are still responsible for the security of the goods and may be liable to pay an amount equivalent to the duty if the excisable goods are not kept safely or are not satisfactorily accounted for.[19]

A storage licence will specify the type of excisable alcohol products and the location. It will also specify the activities, if any, you can undertake in relation to those goods,[20] and whose excisable goods you can store, for example:

  • goods you own
  • goods owned by certain people
  • storage only of underbond packaged product
  • storage only of bulk product (apart from storage in wood for maturation purposes)
  • packaging (in bottles, cans, kegs) that does not involve in-line mixing[21]
  • repacking (outer cartons only), or
  • filtering (except when filtering is combined with other processes and becomes part of an excise manufacturing process).

If you hold a valid manufacturer licence, you do not need a separate storage licence to store goods that you manufacture at those premises. Whilst the storage of your manufactured goods is not manufacture in itself, is a normal part of the chain of events in manufacturing goods. You may also store goods that have been manufactured elsewhere by another entity and moved underbond into your licensed premises.

2.3.2 WHAT ARE MY RESPONSIBILITIES AS A LICENCE HOLDER?

You are responsible for the safe custody of all excisable alcohol products held on your premises and for the observance of the Excise Act at the premises specified in your licence.[22]

You may be responsible for paying an amount equal to the duty that would have been payable on any stolen, missing or unaccounted for underbond excisable alcohol products.[23]

We may take stock of the excisable alcohol products you have manufactured and the materials used manufacturing them. If it appears to us that duty has not been paid on everything correctly, and you cannot satisfactorily account for the difference, you must pay the difference between the amount that has been paid and the amount that should have been paid. [24]

If you wish to destroy any excisable alcohol products you must first obtain permission from us to do so. This does not apply to the destruction of beer of up to 125 litres of alcohol per quarter, provided certain conditions are met. For more information refer to '7.3.1 When can I apply for a remission of excise duty?' of this guide.

You must not move excisable alcohol products, without approval from us. This includes moving excisable alcohol products from your licensed premises to any other location or for export.[25]

For more information about obtaining permission to move excisable alcohol products refer to Chapter 5 - Movement permissions.

You are also responsible for ensuring that you comply with the Excise Act and all conditions of your licence.[26]

You must keep, retain and produce records in accordance with section 50 of the Excise Act.

If you are a manufacturer, you will also need to:

  • ensure excisable alcohol products are only delivered for home consumption with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[27]
  • pay the correct amount of excise duty[28]
  • provide all reasonable facilities to enable us to exercise our powers under the Excise Act,[29] and
  • provide sufficient lighting, correct weights and scales, and all labour necessary for
    • weighing material received into your factory
    • weighing all excisable goods manufactured in your factory, and
    • taking stock of all material and excisable goods contained in your factory.[30]

If you have a storage licence, you will also need to:

  • ensure excisable alcohol products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority, and
  • pay the correct amount of excise duty[31] if you are the owner or manufacturer.

For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty.

2.3.3 WHAT ELSE CAN WE DO?

Access

We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises.[32] Note: we will usually only seek to enter your premises during normal business hours.

Stop vehicles

We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable alcohol products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle be unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[33]

Search vehicles

We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable alcohol products and that the vehicle has been used, is being used or will be used in committing an offence under the Excise Act (and certain offences in the Crimes Act 1914[34] and Criminal Code[35] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[36]

Examine goods

We can open packages and examine, weigh, mark and seal any excisable alcohol products that are subject to excise control and, if you are a manufacturer, lock up, seal, mark or fasten any plant in or on your factory.[37]

We can also:

  • supervise the manufacture of excisable alcohol products,[38] and
  • take, utilise and dispose of samples of materials, partly manufactured excisable alcohol products and excisable alcohol products subject to excise control, and alcohol products that we have reasonable grounds for suspecting are excisable alcohol products on which duty has not been paid.[39]

2.3.4 WHAT RECORDS DO I NEED TO KEEP?

The Excise Act provides that a licence holder, and proprietor of an approved place, shall:

  1. keep such records and furnish such returns as directed
  2. keep these records for the period directed, and
  3. on demand, produce those records to us.[40]

Any such direction will be in writing and included as a condition on your licence.

We can inspect and take copies of any records kept as directed.

If you cease to hold an excise licence you must still keep all records of your previously licensed activities. Records must be kept for the period of time as directed.

For more information about the type of records you may need to keep see the chapter relevant to your industry.

2.3.5 HOW LONG IS MY LICENCE VALID FOR?

Your licence will state its expiry date. When first issued, the licence is valid until the next 30 September two years after the anniversary of the day it is granted.[41]

Example 2B

If we grant a licence on 15 September 2007, it will expire on 30 September 2009.

If we grant a licence on 15 October 2007, it will expire on 30 September 2010.

Upon renewal a licence is valid for a further three years starting from the day after the date of expiry of the existing licence, that is, 1 October three years from the year the existing licence expires.[42]

2.3.6 IS MY LICENCE TRANSFERABLE?

Generally you cannot transfer your licence to another individual or business entity. The proposed new licence holder must apply for a new licence. You must also request cancellation of your current licence if you are no longer carrying out an excise activity. It is important that you advise us of any change in advance of it taking effect.

The exception to the above rule arises when a licence holder dies. If this is the case, the licence is taken to be transferred to the person's legal personal representative. This allows for the finalisation of the affairs and, unless cancelled earlier, the licence is taken to be automatically cancelled three months after the licence holder dies.[43]

For more information about cancelling licences refer to Chapter 4 - Licensing: suspension & cancellation.

Licences may be transferred to new premises if the licence holder relocates their business. However, we will need to be satisfied that the physical security of the new premises is adequate and so you must contact us prior to the relocation to ensure that all the required documentation is finalised in time for the move.

2.3.7 CAN MY LICENSING INFORMATION BE DISCLOSED?

As well as the protection provided by the Privacy Act 1988, the tax laws have secrecy provisions about using and disclosing taxpayer information.[44] We can only look at, record, discuss or disclose information about you when it is a necessary part of our work, or where the law specifies that we may.

Subdivision 355-B of Schedule 1 to the Taxation Administration Act 1953 (TAA) allows us to record or disclose information about you in certain circumstances. For example, it specifically allows us to disclose information about you to the Australian Border Force.

In relation to licensing information, the TAA allows us to disclose information for the purpose of enabling an entity to understand or comply with their tax obligations.[45] This includes:

  • whether another person holds a current excise licence, and
  • any conditions that apply to their licence.

Information may be disclosed by taxation officers in the performance of their duties and would cover disclosing information:

  • to a person dealing or proposing to deal with another person in relation to goods subject to excise control, and
  • provided we are satisfied that disclosure is necessary for the purposes of ensuring the dealing or proposed dealing is in accordance with excise law.[46]

Example 2C

You need to find additional storage space for your finished alcohol products and, therefore, need to check that the entity who offers to store your products has a licence to store excisable alcohol products. We can disclose to you whether or not the other entity holds a storage licence.

If we decide that the disclosure is necessary, we must provide the information in writing to the person who requires it. If the matter is urgent, we may advise by phone. However, we must later confirm the information by letter or fax.

A disclosure may be initiated by us or by you when you request information.

Anyone who receives such information should use it only for the purpose for which it was given. Any other use may be unlawful.

Note: The TAA imposes certain obligations on you concerning the on-disclosure of information that affects another person.[47] The Privacy Act also imposes certain obligations on you concerning the privacy of information that you have received about an individual. Further information can be obtained from the Office of the Australian Information Commissioner.

Our decision in relation to the disclosure of protected information is not a reviewable decision. However you have the right to make a complaint to the Commonwealth Ombudsman about a range of administrative actions we take or the Privacy Commissioner if you think we have breached the Privacy Act in dealing with your personal information.

For information about your review rights refer to Chapter 8 - Reviews and objections.

When you provide details of the authorised person we should contact if we need to know more about your application, or the operations of your business, you are giving us authority to disclose information. This could be yourself, as the applicant, or another person you nominate.

2.4 PROCEDURES

2.4.1 HOW DO I REGISTER FOR EXCISE?

If you will be making payments of excise duty but do not hold (and are not applying for) an excise licence, periodic settlement permission or movement permission you need to register by completing Registration for excise payments (NAT 16623).

While it is not compulsory to provide an Australian Business Number (ABN) or Tax File Number (TFN) for registration, it will help us to process your application.

If you need an ABN, phone 1300 657 162 for a registration pack. You can send your completed ABN registration form with your completed registration application.

To register for excise, complete a Registration for excise payments (NAT 16623).

2.4.2 HOW DO I APPLY FOR A LICENCE?

If you would like to apply for a licence, you should:

  • contact us, and
  • lodge an application form together with all the required supporting documents.

You can contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

Our staff will:

  • discuss your particular circumstances with you
  • give you advice about the appropriate licence or licences
  • explain how to apply
  • explain your ongoing obligations as a licence holder, and
  • provide you with a licence application form.

There is no charge for an excise licence.

How do I lodge an application?

You need to complete the relevant form to apply for a manufacturer or storage[48] licence.

Before lodging your application form, make sure you have included the required supporting documents. Your application form contains information to help you work out which supporting documents you must provide. You may also need to complete other excise forms, depending upon your proposed activities.

Supporting documents include:

  • an accurate plan of the premises that clearly indicates the area for manufacture and/or storage
  • a Declaration of criminal history particulars (NAT 74815) form, or
  • a Consent to criminal history record check (NAT 16358), and
  • an application for permission to move underbond goods.

For more information about movement permissions refer to Chapter 5 - Movement permissions.

You should contact our Licensing staff on 1300 137 290, or email at alcohol@ato.gov.au for advice about the forms and supporting documents that you will need to lodge.

To lodge your completed application form and supporting documents send them to Excise & EEG Client Services via:

the Business Portal

fax at 1300 130 916,
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

You must not manufacture or store excisable goods before your licence has been granted.[49]

We will process your application within 28 days of the date we receive all required information.

2.4.3 HOW DO I CHANGE MY LICENCE DETAILS?

We can amend your licence for changes that do not involve a change of entity. This includes a change of business name (that is your trading name).

A change in composition of a partnership does not affect the continuity of that partnership. Any one or more of the partners may act on behalf of the partnership in notifying changes.[50]

You must advise us of any of these changes within 30 days. We will then provide you with an amended licence.

2.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on licensing matters you can contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days and finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[51]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence the penalty is a maximum of two years in prison or 500 penalty units.[52]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[53]

Keep or store

If you possess or have custody or control of excisable alcohol products without permission the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[54]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[55]

Records

If you do not keep, retain and produce records in accordance with section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[56]

Facilities, etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[57]

If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable alcohol products manufactured in, your factory and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[58]

Marks and seals

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[59]

2.6 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • high strength spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised under the Excise Act.

Excise return

An excise return is the document that you use to advise us of:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your periodic settlement permission, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.[60]

For information about when duty is payable under periodic settlement refer to Chapter 6 - Payment of duty.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. This written direction is included as a condition of your licence.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

2.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

2.7.1 Excise Act 1901

Section 4 - Definitions

Section 6A - How this Act applies to partnerships

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 39 - Applications for licences

Section 39E - Duration of licences

Section 39O - Death of licence holder

Section 46 - Supervision by officers

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 53 - Responsibility of manufacturers

Section 54 - Liability to pay duty

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 62 - Deficiency in duty

Section 77FC - Repackaged beer

Section 86 - Officers to have access to factories and approved places

Section 87 - Power to stop conveyances about to leave an excise place

Section 87AA - Searches of conveyances without warrant

Section 91 - Examine all goods

Section 92 - Seals etc. not to be broken

Section 106 - Samples

Section 117 - Unlawful possession of excisable goods

Section 120 - Offences

Section 159 - Protection of confidentiality of information

2.7.2 Excise Tariff Act 1921

The Schedule

2.7.3 Customs Act 1901

Section 105B - Extinguishment of duty on excise-equivalent goods

2.7.4 Crimes Act 1914

Section 4AA - Penalty units

Section 6 - Accessory after the fact

2.7.5 Criminal Code Act 1995

Section 11.1 - Attempt

Section 11.2 - Complicity and common purpose

Section 11.5 - Conspiracy

2.7.6 Taxation Administration Act 1953

Division 355 - Confidentiality of taxpayer information

Subdivision 355-B - Disclosure of protected information by taxation officers

Subdivision 355-C - On-disclosure of protected information by other people

03 LICENSING: Assessing applications

3.1 PURPOSE

3.2 INTRODUCTION

3.3 POLICY AND PRACTICE

3.3.1 LICENSING CRITERIA

(1) 'Fit And Proper' Person Or Company

(2) Skills And Experience

(3) Physical Security Of The Premises

(4) Suitability Of Plant And Equipment

(5) Market For The Goods

(6) Ability To Keep Proper Books Of Account

(7) Delay Liability For Duty (Storage Licence Only)

(8) Protect the Revenue

3.3.2 WHAT ARE LICENCE CONDITIONS?

Conditions imposed under the Excise Act

Special conditions

3.3.3 WHAT ARE SECURITIES?

3.3.4 ASSESSING YOUR APPLICATION TO RENEW YOUR LICENCE

3.4 PROCEDURES

3.4.1 WHAT HAPPENS IF MY LICENCE IS NOT GRANTED?

3.4.2 WHAT WILL HAPPEN IF MY LICENCE IS GRANTED?

3.4.3 HOW DO I RENEW MY LICENCE?

3.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

3.5 WHAT PENALTIES CAN APPLY FOR OFFENCES IN RELATION TO MAKING AN APPLICATION?

3.6 TERMS USED

3.7 LEGISLATION (quick reference guide)

3.1 PURPOSE

This chapter deals with:

  • licensing criteria
  • licence conditions
  • securities
  • assessing your application to renew your licence
  • what happens if your licence is not granted
  • what will happen if your licence is granted
  • records you need to keep
  • how to renew your licence, and
  • penalties that can apply to offences in relation to making an application.

3.2 INTRODUCTION

The Excise Act provides us with the discretion whether to grant or refuse a licence. We base the decision on the information you supply.

However, subsection 39A(2) of the Excise Act provides that if we consider certain criteria exist they can be the basis for refusal.

In summary those criteria include:

  • whether you or an associate are not 'fit and proper'
  • whether you do not have, or have available to you, the skills and experience required to carry out the activity that would be authorised by the licence
  • the physical security of the premises is not adequate
  • the plant and equipment to be used at the premises are not suitable
  • you will not have a market for the goods
  • you would not be able to keep proper books of account for audit purposes
  • the grant of a storage licence would delay liability for duty, or
  • it is necessary to refuse to grant the licence to protect the revenue.

These criteria are explained in more detail below.

How any of these criteria affects a particular licence application depends on the facts in each particular case. There are, however, some criteria that are critical, for instance:

  • you are not 'fit and proper', and
  • protection of the revenue.

3.3 POLICY AND PRACTICE

3.3.1 LICENSING CRITERIA

(1) 'Fit and proper' person or company

[61]

The nature of the entity applying for the licence will affect who is assessed as being fit and proper:

  • if an individual, the individual is assessed
  • if a partnership, each partner is assessed, and
  • if a company, the company is assessed.

Persons other than the applicant can also be assessed as to whether they are fit and proper. These persons are:

  • another person who would participate in the management or control of the premises that is the subject of the licence application
  • if the applicant is a company, then any director, officer, or shareholder of the company that would participate in the management or control of the company, and
  • certain associates of the applicant (associates can be people or companies).

What does fit and proper mean?

The term 'fit and proper' is not defined in the Excise Act or Excise Regulation.

Fit and proper is dependent on the purpose of the legislation and the proposed activities of the person concerned. In general qualities of diligence, honesty and the likelihood of observance of the law are pivotal characteristics to be taken into account in considering fitness and propriety. In an excise context we are assessing the suitability of the person applying for a licence to have access and control over excisable alcohol products.

The Excise Act provides a definitive list of factors that we will take into account in determining whether a person or company is fit and proper. These factors generally relate to:

  • any prosecution history
  • solvency and financial resources
  • the honesty of information provided by the applicant, and
  • compliance with tax obligations, and
  • licensing history.

In assessing these factors we will consider whether your circumstances demonstrate that you will be diligent, honest, and likely to observe excise laws.

A single factor will not necessarily be determinative of whether a person or company is 'fit and proper'. It will depend on the facts and circumstances of each case.

The weight afforded to each factor in reaching a decision about whether a person or company is 'fit and proper' is a matter for us to decide. We are deciding whether the person or company is fit and proper, and will do so after considering all relevant information.

Some factors apply to both individuals and companies; others are specific to individuals or to companies.

Where a person makes false or misleading statements in their application

[62]

It is important that you provide information that is accurate and complete. If your application (i.e. your completed application form, any supporting documentation and any oral statements made), contains false or misleading statements we will take this into account.

Misleading statements

With regard to this element, the term 'mislead' is not defined in the Excise Act. The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne defines 'mislead' as follows:

  1. cause (a person) to go wrong, in conduct, belief, etc.
  2. lead astray or in the wrong direction.

A misleading statement does not have to successfully mislead us, but it can be taken into account if it was reasonably foreseeable that we could have been misled when assessing the application.

Misleading may be by omission as well as what has been said.

Example 3A

You advise us that you have installed a state of the art security system at your premises. While true, you failed to advise us that a design fault has resulted in repeated false alarms to the point where you have switched off the security system and have no intention of re-engaging it. The design fault cannot be remedied. The only security actually in operation at the premises is a rusty padlock.

The information you provided, whilst not false, could lead us to believe that your premises are secure. This is misleading.

False statements

Where there is a false statement in an application, we take into account whether you knew if the statement was false.[63]

In essence, a statement is false if it is not true. A false statement may be made expressly, or via omission. An example of the former is where you state you have no criminal convictions when in fact you have been convicted. An example of the latter would be to leave the question on your application form in relation to criminal convictions blank when in fact you have been convicted. In both instances, a false statement has been made.

Who are the associates that can be assessed under the fit and proper person test?

[64]

To avoid situations where people with a high risk of non-compliance are able to exercise control over licence holders, certain associates can be assessed under the fit and proper person test.

The word associate effectively takes it meaning from the Income Tax Assessment Act 1936 and is summarised below:

  • An associate of a natural person (otherwise than in the capacity of trustee) includes:
    • a relative[65] of the individual, for example, their spouse, parent, sibling, uncle, aunt
    • a partner of the individual or a partnership in which the individual is a partner
    • if a partner of the individual is a natural person otherwise than in the capacity of trustee, the spouse or child of the partner
    • a trustee of a trust under which the individual or their associate benefits, or
    • a company under the control of the individual or their associate.[66]

Although an associate includes a spouse, a legally married spouse of a person who lives separately and apart on a permanent basis is not an associate.[67]

  • An associate of a company includes:
    • a partner of the company or a partnership in which the company is a partner
    • if a partner of the company is an individual, the spouse or child of the partner
    • a trustee of a trust under which the company or their associate benefits
    • another entity (a company, partnership, trustee or an individual), or its associate(s) who controls the company, or
    • another company which is under the control of the company or the company's associate.[68]
  • The control of a company looks to whether another entity (including individuals):
    • has sufficient influence over the company, or
    • holds a majority voting interest in the company.
  • An associate of a trustee includes an entity or an associate of the entity that benefits or is capable of benefiting either directly or indirectly under the trust.[69]
  • For a partnership an associate includes each partner of the partnership or associate of the partner.[70]

(2) Skills and experience

[71]

Skills and experience are not defined in the Excise Act or Excise Regulation. There is no excise case law regarding skills and experience.

In forming an opinion as to whether you have the required skills and experience we will consider your ability to:

  • carry out the activity requiring a licence
  • conduct a business, and
  • comply with excise obligations.

It is important to note that you, as the applicant, do not necessarily need to possess the skills and experience yourself provided that you can demonstrate that you will use another person's relevant skills and experience, for example by hiring them or using a consultant. Should that be the case, we will assess the other person's skills or experience.

Example 3B

Mr X, as a Director of Z Transport and Logistics Pty Ltd, applies for a storage licence.

Neither Mr × nor any of his staff have the skills and experience to comply with the company's excise obligations. This poses a risk that excisable alcohol products may be sold without adequate record keeping, and may adversely affect revenue and compliance.

Therefore, when assessing this element of subsection 39A(2) of the Excise Act in isolation, Z Transport and Logistics Pty Ltd would fail the requirements of skills and experience. However, a decision on granting a licence is made based on an assessment of all elements of subsection 39A(2).

Z Transport and Logistics Pty Ltd may choose to address the deficiency in skills and experience by appointing a Manager who has the relevant skills and experience.

(3) Physical security of the premises

[72]

Physical security relates to measures that prevent unauthorised access to excisable alcohol products and thus protects against theft or loss of goods and excise revenue.

In forming an opinion about the physical security at the premises, we will consider:

  • the nature of the site
  • the kinds and quantities of goods to be kept, and
  • the procedures and methods adopted to ensure the security of goods.

Consideration of the nature of the site can include:

  • construction (for example floor, walls, ceiling, windows and doors) and whether material is difficult to penetrate or remove
  • barriers (for example fences or wire) to a standard that would prevent unauthorised access
  • locks and bars
  • alarms, security lighting, security guard patrols or closed-circuit TV cameras
  • physical security of all warehouse facilities within the site, and
  • fire alarms, smoke detectors, sprinklers etc.

Consideration of the kind and quantity of goods to be kept at the site can include:

  • the ease with which goods can be handled, for example, bottles of spirits are easier to move than beer in a bright beer tank
  • the rate of excise duty applicable to the goods (goods that attract a greater rate of excise duty represent a greater revenue risk), and
  • the greater the quantity of excisable goods to be dealt with, the higher the level of physical security that would be required.

Consideration of the security procedures and methods can include:

  • gate security system that would identify all people entering and leaving the site, and confirm their right to do so
  • gate security system that would identify the type and quantity of all goods entering and leaving the site
  • surveillance system
  • procedures to handle and retain information from surveillance system (if there is one)
  • access control, for example by limited distribution of keys and access swipe cards or codes
  • security responses when breaches are detected, for example back to base system, and
  • an independent security audit function to oversee all of the above.

(4) Suitability of plant and equipment

[73]

Plant and equipment are considered suitable if they are capable of performing the intended tasks and will allow you to properly account for excisable alcohol products and calculate the correct amount of excise duty.

Plant and equipment that are used in relation to goods at licensed premises include:

  • temperature measuring equipment
  • storage tanks and manufacturing vessels such as fermenters
  • packing machines e.g. bottling equipment, etc
  • weighing equipment e.g. scales and weighbridges
  • counting equipment to determine number of bottles
  • strength determining equipment, and
  • volume measuring equipment.

(5) Market for the goods

[74]

We are primarily concerned with the presence of an available market within Australia. That market must be legal. Licensing is concerned with minimising the risk of excisable alcohol products entering an illicit market in Australia and the resultant loss of revenue.

You must provide sufficient information to identify your proposed market.

You may be able to demonstrate that you have a market by, for example, supplying:

  • evidence of contracts (including 'in principle' contracts) you have negotiated, or
  • a business plan which outlines the market you have identified.

A legitimate market may exist overseas for locally manufactured excisable alcohol products. Applications relating to overseas markets may be subject to additional scrutiny and you may be required to provide additional information or documentation as evidence of the legitimacy of your overseas market.

Therefore, market should be taken to mean that there exists a proven or demonstrated demand for a commodity, or an opportunity for (legally) buying or selling (trading in) a specified commodity. In such cases a market can be either in Australia or overseas.

If you intend to manufacture excisable goods and use them within the operation of your business, you do not need to meet the market test.

Examples of this situation are:

  • a tertiary education facility which distils alcohol for research purposes, or
  • a business which redistils contaminated spirit to re-use in a manufacturing process, such as production of essential oil and perfume.

As the licensing provisions of the Excise Act are directed at controlling commercial operations, it would be inconsistent with those controls to grant a licence for the production of excisable goods for personal use, for example, home distillation.[75] As such, you will not meet the market test where spirit and excisable beverages containing spirit are manufactured for personal consumption.

(6) Ability to keep proper books of account

[76]

This criterion relates to whether you can keep 'proper books of accounts and records' that enable us to audit those records.

You may be asked to demonstrate:

  • the recording systems you intend to use, whether they are manual or electronic
  • where an electronic record keeping system is used, systems documentation showing details such as screens, reports available and security controls, and
  • the internal documentation supporting the recording systems, ensuring that the recording systems will record sufficient detail.

(7) Delay liability for duty (storage licence only)

[77]

This criterion only relates to an application for a storage licence where the granting of the licence would delay liability for duty.

The liability for excise is imposed on goods at the time of manufacture.[78] However, it is not actually paid until a later point.

The wording in paragraph 39A(2)(k) of the Excise Act, "...delay the liability for duty" suggests that one is able to delay the point in time in which the liability arises. However, this is not possible as the imposition of excise, and therefore the time at which the liability arises, is not dependent on any further dealings or processes on those goods. It is only the payment of the liability, the duty, which can be delayed depending on how the goods are dealt with.

We consider that the only possible interpretation of section 39A(2)(k) is that it operates to delay the time the liability must be paid. A storage licence allows for the storage of excisable goods on which duty has not been paid. It effectively allows a manufacturer to defer the payment or transfer the liability to a storage licence holder. The question then arises as to how far down the distribution chain payment of an excise liability may be deferred.

It is our view that we may refuse to grant a storage licence where the granting of the licence would delay payment of duty beyond the point of storage occurring in the normal wholesale distribution of the goods. Using a different perspective, we may refuse to grant a storage licence when refusal is necessary to ensure that excise duty is paid before goods reach the retail level in the distribution chain.

In forming an opinion as to whether the granting of an excise storage licence would delay liability for duty, we will consider:

  • the purpose for which the goods are to be stored, and
  • whether the premises in question are for storage occurring in the normal wholesale distribution of the goods, or for storage beyond the normal wholesale distribution of the goods (for example, storage for a retail premises).

(8) Protect the revenue

[79]

The term 'necessary to protect the revenue' is not defined in the Excise Act.

The meaning of 'protect the revenue' was considered by Deputy President Forgie in Martino and Australian Taxation Office.[80] She said:

50. The expression "protect the revenue" is not defined in the Act and I am not aware of any authorities that have considered it. The word "revenue" has been considered in Stephens v Abrahams (1902) 27 VLR 753 by Hodges J:
"... the 'revenue' to be moneys which belong to the Crown, or moneys to which the Crown has a right, or moneys which are due to the Crown,
51. The ordinary meanings of the word "protect" include "keep safe, take care of" ... and they would seem to be the senses in which the word is used in the expression "protect the revenue". Mr Martino's licence may only be cancelled if it is necessary to take care of the money belonging to the Crown in right of the Commonwealth. That has the aspect of ensuring that the Commonwealth receives all that it should in the form of any excise that is ultimately payable in respect of tobacco originally grown on Mr Martino's farm and keeps all that it receives. It also has the aspect of not spending more of the Commonwealth's money than need be spent in carrying out its supervisory duties and responsibilities under the Act and in ensuring that the tobacco is not marketed illegally in Australia, and so avoid the payment of excise duty, if it cannot be marketed legally.
52. What is meant by the word "necessary"? I have taken the view that the meaning adopted by Allen J in State Drug Crime Commission of NSW v. Chapman (1987) 12 NSWLR 447:
"As to the word 'necessary' it does not have, in my judgment, the meaning of 'essential'. The word is to be subjected to the touchstone of reasonableness. The concept is one as to what reasonably is necessary in a common sense way.'

While this case was in relation to tobacco growing, the finding is equally applicable to alcohol. 'Protect the revenue' therefore means ensuring that the Commonwealth receives the full amount of excise duty that is ultimately payable and we do not spend more Commonwealth funds than necessary to carry out our responsibilities.

3.3.2 WHAT ARE LICENCE CONDITIONS?

Licence conditions form part of your licence. They place restrictions, limitations or obligations on licence holders. They may define permissible activities and require you to take certain actions if defined circumstances arise. If you fail to comply with a condition, we may suspend or cancel your licence.[81]

For information about when we can suspend or cancel your licence refer to Chapter 4 - Licensing: suspension & cancellation.

All excise licences are subject to certain conditions imposed by:

  • the Excise Act,
  • us ('special conditions').

We are able to add, vary or modify special conditions even after the licence has been granted.[82] We will notify you in writing if we do so and provide you with an amended licence that includes the amended conditions.

Conditions imposed under the Excise Act

You must advise us in writing within 30 days if:[83]

  • you or any person participating in the management or control of a licensed company or premises is charged with or convicted of:
    • an offence against a provision of the Excise Act, or
    • an offence against a law of the Commonwealth, a State or a Territory that is punishable by imprisonment for a period of one year or longer or by a fine of 50 penalty units or more
  • you become bankrupt
  • a person not listed in the licence application starts to participate in the management or control of the licensed premises or company, as the case may be
  • there is a change in the membership of a partnership that holds a licence
  • a company that holds a licence comes under receivership, administration or begins to be wound up
  • there is a change that substantially affects the physical security of the licensed premises or plant and equipment used in relation to excisable goods at the premises
  • you hold a manufacturer licence and you cease to manufacture excisable goods at the licensed premises, or
  • you hold a storage licence and you cease to keep and store goods at the licensed premises.

Special conditions

We can also impose special conditions on your licence if we find it necessary to protect the revenue or ensure compliance with the Excise Act.[84] Directions issued under section 50 of the Excise Act to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand are included as a special condition on each licence.

Examples of other conditions that have been imposed under this provision are:

  • the trustee for a trust to notify the Collector of the appointment of a new trustee in writing and prior to the appointment of the new trustee
  • restrict the storage of excisable goods (by a storage licence holder) to ship's stores and aircraft's stores, and/or
  • restrict the quantity of excisable goods that a licensed manufacturer may manufacture.

The examples of special conditions given above are only for illustrative purposes. The decision to impose special conditions is considered on a case by case basis.

You can apply to have these special conditions varied, revoked or added. We will consider and advise you of our decision.

If you are not satisfied with our decision, you can ask for a review by lodging an objection within 60 days of the day we notify you.[85]

For more information about your review rights refer to Chapter 8 - Reviews and objections.

3.3.3 WHAT ARE SECURITIES?

We can use special conditions as a mechanism to increase the level of protection of the revenue or to ensure compliance with the Excise Act. However, prior to granting the licence we may also require you to provide a security to achieve the same result. Even if we don't require a security prior to the granting of the licence, we may ask for a security at a later time. We can also ask you to increase the value of any security you may already have given.[86]

A security can be a bond, guarantee, cash deposit or similar financial product for an amount of money which may be forfeited if there is a failure to comply with the Excise Act. It is not necessary for a liability to arise as a result of the failure to comply, for the security to be forfeited. There is no statutory limit to the amount of a security but the amount is generally set by reference to the level of revenue at risk.

We review securities every three years, at which time they may be extended, revised or cancelled.

The decision to require a security is not reviewable under the objection process. However, there may be other avenues for review, for example you may seek an informal review of our decision.

For information about your review rights refer to Chapter 8 - Reviews and objections.

3.3.4 ASSESSING YOUR APPLICATION TO RENEW YOUR LICENCE

Licences are only valid for a specified period. Renewal of a licence is not automatic and you must apply to renew your licence before it expires. In assessing an application to renew a licence we consider the same criteria that exist for cancelling a licence. That is, if reasons exist for us to cancel your licence (assuming that it had not expired) then we may decide not to renew your licence.

For more information about the criteria for cancelling a licence refer to Chapter 4 - Licensing: suspension & cancellation.

If you have applied before the date of expiration on your licence but we have not made a decision by this date, the licence remains in force until such time as we do make a decision.

If we refuse your licence renewal, you may object to the decision.

For more information about your review rights refer to Chapter 8 - Reviews and objections.

As an alternative to non-renewal of a licence, we may:

  • alter existing conditions on your licence
  • impose new conditions, or
  • require you to provide a financial security.

If you have not applied to renew your licence then the licence expires on 30 September and you can no longer carry out excise related activities.

3.4 PROCEDURES

3.4.1 WHAT HAPPENS IF MY LICENCE IS NOT GRANTED?

If we do not grant a licence, we will notify you of the decision and provide you with an explanation for our decision.

If you are not satisfied with our decision, you can ask for a review by lodging an objection within 60 days of the day we notify you.[87]

For more information about your review rights refer to Chapter 8 - Reviews and objections.

3.4.2 WHAT WILL HAPPEN IF MY LICENCE IS GRANTED?

If we grant you a licence, we will post it to you. All special conditions will form part of the licence. We will also provide you with an establishment number for the premises specified in your licence. This will be needed in some of your dealings with us.

You may receive a visit or phone call from us to see whether you understand your obligations or need further assistance to comply.

3.4.3 HOW DO I RENEW MY LICENCE?

We will send you an invitation to renew your licence at least six weeks before the licence expires. We will also send an application form containing your details. You must verify the details on the application, provide any required information, sign and return it to us before your licence expires.

Your existing licence will remain valid until we make a decision about your application for renewal.[88]

Excise manufacturer and storage licences are renewed for a period of three years.

Example 3C

Your licence is due to expire on 30 September 2019 (the expiry day). On 1 September 2019 you apply to renew the licence. We have not decided the application by the end of 30 September 2019.

The licence continues in force automatically past 30 September 2019 until we decide the application.

On 15 October 2019 we decide to renew the licence. The renewed licence expires on 30 September 2022.

If you wish to renew your licence but you have not received an invitation to renew within four weeks of the date of expiry you need to contact us.

3.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on licensing matters contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

3.5 WHAT PENALTIES CAN APPLY FOR OFFENCES IN RELATION TO MAKING AN APPLICATION?

The following are the penalties that may apply after conviction for an offence.

False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units.[89]

3.6 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

3.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

3.7.1 Excise Act 1901

Section 16 - Right to require security

Section 17 - Form of security

Section 18 - General security may be given

Section 19 - Cancellation of bonds

Section 20 - New sureties

Section 21 - Form of security

Section 22 - Effect of security

Section 39 - Applications for licences

Section 39A - It is in the Collector's discretion whether to grant licence

Section 39B - Determining whether a natural person is fit and proper

Section 39C - Determining whether a company is fit and proper

Section 39D - Conditions of licence

Section 39DA - Changing licence conditions on own initiative

Section 39F - Renewal of licences

Section 39G - When the Collector may suspend a licence

Section 39Q - Review of decisions

Section 120 - Offences

3.7.2 Excise Tariff Act 1921

Section 5 - Duties of excise

The Schedule

3.7.3 Income Tax Assessment Act 1997

Section 995-1 - Definitions

3.7.4 Income Tax Assessment Act 1936

Section 318 - Associates

3.7.5 Corporations Act 2001

Section 9 - Dictionary

Part 5.3A - Administration of a company's affairs with a view to executing a deed of company arrangement

3.7.6 Crimes Act 1914

4AA - Penalty units

04 LICENSING: Suspension & cancellation

4.1 PURPOSE

4.2 INTRODUCTION

4.3 POLICY AND PRACTICE

4.3.1 WHAT HAPPENS IF I CEASE MY EXCISE BUSINESS?

4.3.2 WHEN CAN YOU SUSPEND AND/OR CANCEL MY LICENCE?

4.4 PROCEDURES

4.4.1 SERVICE OF NOTICES

4.4.2 WHAT DO I DO IF I NEED MORE INFORMATION?

4.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SUSPENSIONS AND CANCELLATIONS

4.6 TERMS USED

4.7 LEGISLATION (quick reference guide)

4.1 PURPOSE

This chapter deals with:

  • what happens when you cease your business
  • when your licence can be suspended or cancelled
  • service of notices, and
  • penalties that can apply to offences in relation to suspensions and cancellations.

4.2 INTRODUCTION

Your licence remains in force until it expires or is cancelled. However, activities approved under your licence may be restricted if we suspend your licence. Suspension may be a temporary measure or may lead to the cancellation of your licence.

We can cancel your licence if:

  • you ask us to do so (for example, where you intend to cease business), or
  • we make a decision to do so because one or more of the following criteria are present:
    • you or an associate are not 'fit and proper' as an individual or company
    • a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person
    • a person who participates in the management or control of the premises is not a 'fit and proper' person
    • you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence
    • the physical security of the premises is inadequate
    • the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises
    • you have no market for the goods covered by the licence
    • you are not keeping proper books of account for audit purposes
    • you have breached a condition of your licence
    • you have made a false or misleading statement to us [90]
    • cancellation is necessary for the protection of the revenue, or
    • cancellation is necessary to ensure you comply with excise law.

4.3 POLICY AND PRACTICE

4.3.1 WHAT HAPPENS IF I CEASE MY EXCISE BUSINESS?

Your licence conditions require you to notify us within 30 days if you permanently cease activities that require an excise licence. To finalise your excise obligations you must request in writing a cancellation of your licence.

Before we can cancel your licence we must be satisfied that you no longer have any excisable alcohol products. To be satisfied of this we may:

  • arrange a final audit of goods at the licensed premises, and
  • work out if you are liable to pay any excise duty.

Although your licence conditions require you to notify us within 30 days of cessation of activities, you are encouraged to notify us at the earliest opportunity. This will enable us to assist you to check your records and any stock on hand prior to closure of the site for excise purposes.

If you want to sell your business with the stock included, we can coordinate your licence cancellation with the licence approval for the new owner. (This does not mean that the new owner will automatically be granted a licence). This will ensure the premises and goods are covered by a licence at all times.

If you do not intend to sell the goods with your business, you can:

  • pay any outstanding excise duty on goods held at the licensed premises and then dispose of them as you wish, or
  • move the goods to another licence holder's premises, provided you have permission from us to move goods to those premises.[91]

We will cancel your licence by giving you written notice.[92]

4.3.2 WHEN CAN YOU SUSPEND AND/OR CANCEL MY LICENCE?

What is the difference between suspension and cancellation?

Suspension of a licence is a temporary measure we may take that limits the activities you can undertake during the period of suspension. It could be followed by cancellation of the licence or revocation of the suspension. Cancellation is a permanent measure which has the effect of prohibiting you from undertaking the activities for which you were previously licensed.

When can you suspend or cancel my licence?

We can suspend or cancel your licence if we have reasonable grounds for believing:[93]

  • you are not 'fit and proper' as an individual or company*
  • a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person*
  • a person who participates in the management or control of the premises is not a 'fit and proper' person*
  • you are an associate of a person or a company that is not 'fit and proper'*
  • you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence*
  • the physical security of the premises is inadequate*
  • the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises
  • you have no market for the goods covered by the licence*
  • you are not keeping proper books of account for audit purposes
  • you have breached a condition of your licence
  • you have made a false or misleading statement to us
  • suspension is necessary for the protection of the revenue*, or
  • suspension is necessary to ensure that you comply with excise law.

* For an explanation of these criteria, please refer to '3.3.1 - Licensing criteria' in Chapter 3 - Licensing: Assessing applications.

The criteria that have not been the subject of previous discussion in this guide are covered below:

  • you are not keeping proper books of account for audit purposes. For this criterion, we are assessing your actual record keeping practices during the licence period and whether they are in an adequate state for an audit.
  • you have breached a condition of your licence. A breach means you have not complied with a condition. In deciding whether or not to suspend we will take into account the following:

    1. the severity of the breach
    2. the circumstances surrounding the breach
    3. what the condition is (i.e. the risk it is addressing).
  • you have made a false or misleading statement to us. In considering your initial application, the false or misleading statements we take into account are in your application. Once you have been granted a licence, we can take into account any statements (including for example in a return, letter or response to a question) you have made in relation to your excise activities.
  • suspension is necessary for the protection of the revenue to ensure you comply with excise law . Where we consider that you are not complying with your obligations under the Excise Act, for example, if you have been manufacturing excisable alcohol products in contravention of your manufacturer licence.

What happens if you suspend my licence?

If we believe your conduct warrants consideration of suspension of your licence we will generally advise you of our concerns and provide you with an opportunity to rectify the issues identified.

If we decide to suspend your licence, this will be done by serving a Notice of suspension. The notice may be served on you, or given to a person who appears to participate in the management or control of the licensed premises.

A Notice of suspension will state that, if you want to stop the cancellation of your licence, you must provide us with a written statement, within seven days of the notice being served, giving reasons why your licence should not be cancelled. We will include our reasons for deciding to suspend your licence with the Notice of suspension.

The notice will also state when the suspension takes effect, which could be immediately.

When your licence is suspended, unless you have written permission from us, it is against the law to:

  • if you are the holder of a manufacturer licence, manufacture excisable alcohol products, or
  • if you are the holder of a storage licence, keep or store excisable alcohol products at licensed premises.[94]

During the period of suspension we may give you written permission to:[95]

  • keep or store goods at your licensed premises
  • carry out a process at your premises, or
  • move goods from your premises to another place.

As a result of a suspension, we may:

  • require the owner (you or a third party) of excisable alcohol products to move the goods from your premises to another place
  • require payment of any costs incurred by us as a result of the suspension
  • carry out a stocktake so that the total excise liability is known, and
  • take control of your licensed premises and any excisable alcohol products stored at these premises.

If we suspend your licence we have 28 days to cancel your licence. During this period we can revoke the suspension if you satisfactorily address the issues which led to the suspension. If we revoke a licence suspension we will do so in writing. We may impose additional conditions or allow you to resume your excise activities under the existing conditions.

All decisions in relation to the suspension of a licence are reviewable by lodging an objection within 60 days of the day we notify you.

For more information about your review rights refer to Chapter 8 - Reviews and objections.

What happens if you cancel my licence?

We can cancel your licence for the same reasons we can suspend your licence.

We can cancel your licence without previously suspending your licence. This may occur where we consider the issues require immediate action. For example systemic delivery of excisable alcohol products without payment of required duty.

If we cancel your licence we will serve you with a Notice of cancellation. If we cancel your excise licence, you are not permitted to manufacture or store excisable products. You are also not permitted to move excisable alcohol products without our permission.

The notice may be served on you, or given to a person who appears to participate in the management or control of the licensed premises. We will include our reasons for deciding to cancel your licence with the Notice of cancellation.

At the same time, we will serve the owner of the excisable alcohol products (whether that is you or someone else) notice in writing to either:

  • pay the duty on the goods, or
  • move the goods to another place in accordance with our permission.

This notice is served in the same manner as the Notice of cancellation.

If the owner does not comply with the notice to pay duty or move the goods, then we may sell or dispose of the excisable alcohol products.[96]

If we cancel your licence, you must retain all records that you have been directed to keep, for the period you have been directed.

Special provisions in regard to cancellation of a licence relating to beer manufacture

The law differs in some respects with regard to a licence cancellation where you have a licence to manufacture beer:[97]

  • We may dispose of any beer remaining at your former licensed brewery premises after one month, if duty has not been paid. Disposal includes moving the beer from your premises.
  • If the beer is unsaleable or unlikely to realise the amount of the duty and costs associated with its removal and sale, we may destroy it.

If you are not satisfied with our decision to cancel your licence or dispose of your excisable goods, you can request a review of our decision by lodging an objection within 60 days of the day we notify you.[98]

For more information about your review rights refer to Chapter 8 - Reviews and objections.

Can I apply for another licence if I have had a licence cancelled?

Yes, you can apply for another licence. However, we will take the reasons for the cancellation into account when considering any new application.

4.4 PROCEDURES

4.4.1 SERVICE OF NOTICES

Notices of suspension or cancellation and directions to deal with excisable alcohol products will be served either:[99]

  • personally or by post[100] on you, or
  • personally on a person who, at the time the notice is served, appears to participate in the management or control of the licensed premises.

4.4.2 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on suspension or cancellation of a licence contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

4.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SUSPENSIONS AND CANCELLATIONS

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products when your manufacturer licence is suspended, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[101]

Keep or store

If you store excisable alcohol products when your storage licence is suspended, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[102]

Remove

If your licence has been cancelled or expired, you must not without permission remove excisable alcohol products, on which duty has not been paid, from the premises specified in the licence. The penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[103]

If your brewery licence has been cancelled, or has expired and has not been renewed, you must not, without permission, remove or cause to be removed any beer on which duty has not been paid, from the premises specified in the licence. The penalty is a maximum of 50 penalty units.[104]

4.6 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • high strength spirit for non-beverage use, including denatured spirit.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

4.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

4.7.1 Excise Act 1901

Section 39G - When the Collector may suspend a licence

Section 39J - Method of suspension

Section 39K - Activities that are prohibited during suspension

Section 39L - Cancellation of licences

Section 39M - Removal of goods on cancellation etc. of licence

Section 39N - Removal of goods by Collector on cancellation etc. of licence

Section 39P - Service of notices

Section 39Q - Review of decisions

Section 77E - Removal of beer when licence ceases to be in force etc.

Section 77F - Disposal of beer by Collector on cancellation etc. of licence.

4.7.2 Excise Tariff Act 1921

The Schedule

4.7.3 Crimes Act 1914

Section 4AA - Penalty units

05 MOVEMENT PERMISSIONS

5.1 PURPOSE

5.2 INTRODUCTION

5.3 POLICY AND PRACTICE

5.3.1 WHAT DIFFERENT PERMISSION TYPES ARE THERE?

5.3.2 CAN I GET A MOVEMENT PERMISSION?

5.3.3 WHAT IS INCLUDED IN A MOVEMENT PERMISSION?

5.3.4 DOES THE RECEIVING PREMISES HAVE TO BE LICENSED?

5.3.5 WILL I NEED TO PAY A SECURITY?

5.3.6 WHAT HAPPENS WHEN MY MOVEMENT PERMISSION IS GRANTED?

5.3.7 WHAT ARE MY RESPONSIBILITIES?

5.3.8 WHAT HAPPENS IF MY APPLICATION IS NOT APPROVED?

5.3.9 WHEN AND HOW CAN A MOVEMENT PERMISSION BE REVOKED OR CANCELLED?

5.4 PROCEDURES

5.4.1 HOW DO I APPLY FOR A MOVEMENT PERMISSION?

5.4.2 HOW DO I AMEND MY CONTINUING MOVEMENT PERMISSION?

5.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

5.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO MOVEMENT PERMISSIONS?

5.6 TERMS USED

5.7 LEGISLATION (quick reference guide)

5.1 PURPOSE

This chapter deals with:

  • why you need a movement permission
  • different movement permission types
  • whether you can get a movement permission
  • what is included in a movement permission
  • whether the receiving premises have to be licensed
  • whether you will need to pay a security
  • what happens when your movement permission is granted
  • your responsibilities
  • what happens if your application for a movement permission is not approved
  • when and how a movement permission can be revoked or cancelled
  • how to apply for a movement permission
  • how to amend a continuing movement permission, and
  • penalties that can apply to offences in relation to movement permissions.

5.2 INTRODUCTION

Under the excise system, control of goods from the time of creation to the point of authorised delivery of the goods into the Australian domestic market, or export, lies with the Commissioner. To maintain this control, the Excise Act requires that excisable goods are not to be moved without permission.[105]

We refer to this form of permission as a movement permission. It is a permission we provide in writing that authorises you to move specified goods from a specified place to another.[106] This permission may be subject to conditions.

The permission holder retains responsibility for any excise liability arising on the excisable alcohol products until they are taken up into the stock of the new premises.

5.3 POLICY AND PRACTICE

5.3.1 WHAT DIFFERENT PERMISSION TYPES ARE THERE?

Depending on your circumstances, you may apply for a permission to move excisable alcohol products once (single permission) or excisable alcohol products of a particular kind on a continuing basis (continuing permission). Continuing permissions are used where you have a need to move excisable alcohol products in a regular pattern (for example, a delivery each week to the same premises). A single permission is used when movements are not on a continuing or regular pattern to the same premises.

There are four types of movement permission:

  • Single movement permission (non-export) - a permission to move excisable alcohol products from one specified place to another specified place (effective for one movement)
  • Continuing movement permission (non-export) - a permission to move excisable alcohol products of a kind specified from one specified place to another specified place on a continuing basis
  • Single movement permission (export) - a permission to move excisable alcohol products only to a place of export (effective for one movement), or
  • Continuing movement permission (export) - a permission to move excisable alcohol products only of a kind specified to a place of export on a continuing basis.

An export movement permission is not an authority to export. You must obtain this separately from the Department of Home Affairs.

5.3.2 CAN I GET A MOVEMENT PERMISSION?

You can be granted a movement permission if you are the licence holder of:

  • the licensed place from where the goods are despatched or
  • the licensed place where the goods are received.

You can also be granted a movement permission if you are the owner of the excisable alcohol products even if you do not hold a current excise licence.

5.3.3 WHAT IS INCLUDED IN A MOVEMENT PERMISSION?

Each movement permission we approve contains three parts:

1. The permission

This specifies

  • the permission holder.

2. The conditions

Movement permissions can be subject to conditions that are necessary to protect the revenue or ensure compliance with the Excise Act. In general, the conditions listed below are considered necessary to do that.

As a standard condition, you must provide to both the despatching and receiving premises a consecutively numbered document with each movement of goods that specifies:

  • the despatching premises and destination
  • the date of despatch
  • the number and type of packages
  • a description of the goods
  • a statement that the goods are underbond, and
  • any other information necessary to permit the goods to be dealt with at the destination.

A condition can also have a restriction limiting the volume of goods that can be moved within a specific period of time, or at any one time.

A copy of the movement document is to be sent separately to the specified destination place. It should be sent within 24 hours of the dispatch of the goods. Note that this condition does not apply to Export Movement Permissions.

3. The schedule

This specifies:

  • the premises from which the goods can be removed
  • the premises to which the goods can be moved
  • the goods by tariff item that can be moved under the permission, and
  • for single movement permissions, the period or dates when the goods may be moved.

If you own both the licensed premises between which goods are being moved, the schedule may not specify all these details but only that any movement of goods between premises licensed to you is approved.

The type of goods may be expressed generally (for example 'excisable goods', 'excisable alcohol products') or specifically, by tariff item number or description.

A single movement permission will specify the kind and quantity of the goods that can be moved, for example 12 (cartons) × 24 (cans) × 375 ml rum & cola @ 5% alcohol by volume = 5.4 Lals classified to excise tariff item 2.

5.3.4 DOES THE RECEIVING PREMISES HAVE TO BE LICENSED?

Generally, the receiving premises should be licensed. However, we may authorise underbond movement of goods to an unlicensed 'specified place', for example a waste destruction facility.

5.3.5 WILL I NEED TO PAY A SECURITY?

Prior to granting a movement permission, we may also require you to provide a security to protect the revenue or ensure compliance with the Excise Act. Even if we don't require a security prior to the granting of the movement permission, we may ask for a security at a later time. We can also ask you to increase the value of any security you may already have given.[107]

A security can be a bond, guarantee, cash deposit or similar financial product for an amount of money which may be forfeited if there is a failure to comply with the Excise Act. It is not necessary for a liability to arise as a result of the failure to comply, for the security to be forfeited. There is no statutory limit to the amount of a security but the amount is generally set by reference to the level of revenue at risk.

As part of assessing your application for a movement permission, we will decide whether you must provide a security. We will take into account:

  • whether you currently hold an excise licence
  • whether the despatching and receiving premises are licensed
  • the type of goods involved
  • the amount of the liability on the goods
  • the tax compliance record of
    • the applicant for the permission
    • the despatching premises
    • the receiving premises, and
  • the susceptibility of the goods to be lost or diverted into the Australian domestic market without the payment of duty.

We review securities linked to continuous movement permissions every three years, at which time they may be extended, revised or cancelled. Compliance with a single movement permission is assessed on completion of the movement of the excisable goods covered by the permission.

The decision to require a security is not a reviewable decision under the objection process. However, there may be other avenues for review, for example you may seek an informal review of our decision.

For information about your review rights refer to Chapter 8 - Reviews and objections

5.3.6 WHAT HAPPENS WHEN MY MOVEMENT PERMISSION IS GRANTED?

When your movement permission is granted, it will be sent to you. You can then move your goods in accordance with the schedule. You will need to keep appropriate records to track the movement of your goods.

5.3.7 WHAT ARE MY RESPONSIBILITIES?

Where you have had possession, custody or control of goods we may request you (the permission holder) to account for the goods. If you are able to demonstrate that the goods have been lawfully moved under a movement permission, this will be considered a satisfactory accounting. It is important that you keep satisfactory records of any movements of goods from your premises.

If you cannot satisfactorily account for the goods, we may demand an amount equal to the duty that would have been payable on the goods.[108]

The permission holder is accountable for the goods:

  • from the time they are removed from the despatching premises, and
  • until they are delivered to the receiving premises.

If you transfer goods to another premises and there is a discrepancy between the quantity shown in the delivery documentation and the physical quantity received you should contact us.

In the exceptional case where the goods are moved to unlicensed premises, this explanation alone will be insufficient to satisfactorily account for the goods.

5.3.8 WHAT HAPPENS IF MY APPLICATION IS NOT APPROVED?

If we do not approve your application for a movement permission, or to amend your existing movement permission, we will notify you in writing. You will not be able to move the goods to the place nominated in the application. If you are not satisfied with our decision, you can ask us to review it.

For information about your review rights refer to Chapter 8 - Reviews and objections.

5.3.9 WHEN AND HOW CAN A MOVEMENT PERMISSION BE REVOKED OR CANCELLED?

A continuing movement permission remains in effect until it is cancelled.[109]

We can cancel your movement permission if:

  • you ask us to do so
  • we consider that there is a risk to the revenue, or
  • we have cancelled the licence of the receiving or despatching premises.

If we decide to cancel your movement permission, we will notify you in writing. The cancellation will take effect from the time:

  • you are served with the cancellation notice, or
  • specified on the cancellation notice.

A decision to revoke or cancel a movement permission is not a reviewable decision.

For information about your review rights refer to Chapter 8 - Reviews and objections.

5.4 PROCEDURES

5.4.1 HOW DO I APPLY FOR A MOVEMENT PERMISSION?

To apply for a movement permission, you should complete the relevant form, available on our website.

If you do not have control of the proposed receiving premises (licensed or unlicensed), we require you to obtain a letter from the operator of these premises stating that they will accept responsibility for the underbond goods when received. The instructions for the movement permission application forms contain details of the statement required from the operator of the receiving premises.

If you need to deliver goods to new premises within specified periods please ensure that you allow sufficient time for your application to be determined. Generally, we will make a decision on your application within 28 business days unless we need further information.

5.4.2 HOW DO I AMEND MY CONTINUING MOVEMENT PERMISSION?

If you wish to amend your existing continuing movement permission (for example, change the schedule of receiving premises), you must send us either:

  • a new application form with the amending details, or
  • a letter including the permission number and necessary changes.

If you wish to add new receiving premises to your existing permission, you must also provide us with a letter from the operator of the receiving premises accepting responsibility for the underbond goods when received. The instructions for the movement permission application form contain details of the statement required from an operator of the receiving premises.

We will consider your request and send you a new or amended permission if approved. In the meantime you cannot move goods outside your current permission.

5.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on movement permissions contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

5.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO MOVEMENT PERMISSIONS?

The following are the penalties that may apply after conviction for an offence.

Move

If you move excisable alcohol products without a movement permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[110]

If you move excisable alcohol products contrary to your movement permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[111]

5.6 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • high strength spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your periodic settlement permission, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.[112]

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

5.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

5.7.1 Excise Act 1901

Section 16 - Right to require security

Section 17 - Form of security

Section 18 - General security may be given

Section 19 - Cancellation of bonds

Section 20 - New sureties

Section 21 - Form of security

Section 22 - Effect of security

Section 60 - Persons to keep excisable goods safely

Section 61A - Permission to remove goods that are subject to the CEO's control

Section 117A - Unlawfully moving excisable goods

5.7.2 Excise Tariff Act 1921

The Schedule

5.7.3 Crimes Act 1914

4AA - Penalty units

5.7.4 Acts Interpretation Act 1901

Section 33 - Exercise of powers and duties

06 PAYMENT OF DUTY

6.1 PURPOSE

6.2 INTRODUCTION

6.3 POLICY AND PRACTICE

6.3.1 WHEN IS DUTY PAYABLE?

6.3.2 WHEN IS DUTY PAYABLE UNDER A PERIODIC SETTLEMENT PERMISSION?

6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?

6.3.4 WHEN IS DUTY NOT PAYABLE?

6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAY?

6.3.6 RULES FOR MEASURING VOLUME AND ALCOHOLIC STRENGTH

6.3.7 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?

6.3.8 DO I HAVE TO ACCOUNT FOR EXCISABLE ALCOHOL PRODUCTS?

6.3.9 STOCK MANAGEMENT

6.4 PROCEDURES

6.4.1 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?

6.4.2 WHAT DOES MY PSP INCLUDE?

6.4.3 WHAT MUST I DO TO DELIVER ALCOHOL PRODUCTS INTO THE AUSTRALIAN DOMESTIC MARKET?

6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?

6.4.5 WHAT DO I DO IF I HAVE MADE AN ERROR ON MY EXCISE RETURN?

6.4.6 WHAT DO I DO IF I NEED MORE INFORMATION?

6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?

6.6 TERMS USED

6.7 LEGISLATION (quick reference guide)

6.1 PURPOSE

This chapter deals with:

  • when duty is payable
  • when duty is payable under periodic settlement
  • when duty is payable under prepayment of excise duty
  • when duty is not payable
  • how to work out the amount of duty you're liable to pay, including tariff proposals and quotas
  • whether you have to account for excisable alcohol products
  • how to get a Periodic settlement permission (PSP)
  • what your PSP will include
  • what to do to deliver alcohol products into the Australian domestic market
  • how to lodge excise returns and pay excise duty
  • what to do if you have made an error on your excise return, and
  • penalties that can apply to offences in relation to payment of duty.

6.2 INTRODUCTION

Excise duty is imposed at the time of manufacture of excisable alcohol products.[113] However, the duty is not required to be paid at the time of manufacture.

This chapter focuses on the payment of duty and when and how much duty is payable.

To ensure the duty is ultimately acquitted, excisable alcohol products remain subject to our control until they are delivered:

  • into the Australian domestic market, or
  • for export to a place outside Australia.[114]

The liability for duty, imposed at the time of manufacture, can be acquitted by:

  • payment of the duty
  • export of the goods
  • remission, or
  • use of the goods in the manufacture of other excisable goods.

Alternatively the liability can be transferred with the goods if they are sold while underbond.

6.3 POLICY AND PRACTICE

6.3.1 WHEN IS DUTY PAYABLE?

When the liability for duty becomes payable depends on how authority is given to deliver the excisable alcohol products into the Australian domestic market. Authority to deliver excisable alcohol products into the Australian domestic market can be given on a continuing basis, known as a periodic settlement permission (PSP),[115] or on an ad hoc basis, known as prepayment of duty.[116]

6.3.2 WHEN IS DUTY PAYABLE UNDER A PERIODIC SETTLEMENT PERMISSION?

Under a PSP the duty is paid after the excisable alcohol products are delivered into the Australian domestic market.

To understand when the duty is paid in the case of periodic settlement requires an understanding of what the permission is and what your obligations are under such permission.

A PSP allows you to report deliveries and to pay duty on a periodic basis after the goods have been delivered into the Australian domestic market.[117] Periodic settlement is the most common arrangement for the delivery of goods into the Australian domestic market.

You may apply for a PSP that covers any recurring seven-day reporting period.[118] You may specify in your application the 7 day period you wish to use, for example, Wednesday to Tuesday.[119] The application must be made in the approved form.[120]

You may apply for a monthly PSP if you are either:

  • a small business entity or eligible business entity;[121] or
  • included in a particular class of business or you deliver goods that are of a particular kind.[122]

The class of business or particular kind of goods must be prescribed in the Excise Regulation. The Excise Regulation does not currently prescribe any class of business and there are no goods prescribed relevant to alcohol.

From 1 July 2016, a 'small business entity'[123] is a business with an aggregated turnover for the previous year of less than $10 million or is likely to have an aggregated turnover for the current year of less than $10 million.

From 1 July 2021, an 'eligible business entity'[124] is a business with an aggregated turnover for the previous year of more than $10 million but less than $50 million, or is likely to have an aggregated turnover for the current year of more than $10 million but less than $50 million.

A PSP is given in writing and includes:

  • your name as the holder of the PSP
  • the kind of goods to which the PSP applies
  • the place from which the goods may be delivered
  • the start date of the PSP and whether it is for a seven-day or monthly period; and
  • any special requirements of the periodic settlement.[125]

In considering your application for a PSP we will take into account various issues including compliance with the law and the protection of the excise revenue. We will also consider whether you have complied with the requirements of any previous permission you have been given. If we refuse to give a PSP we will issue you a notice in writing setting out the reasons for the refusal.[126]

A decision we make in relation to the period of a PSP or any condition for a PSP is a reviewable decision.[127]

For information about your review rights refer to Chapter 8 - Reviews and objections.

If you have a seven-day PSP, you must:

  • lodge an excise return, on the due date specified in your PSP (ie the first business day following the end of the seven-day period). The return details the goods you have delivered into the Australian domestic market during the settlement period.[128]
  • pay the duty, on the first business day following the end of the seven-day period, on the goods you have delivered within the settlement period.[129]

A 'business day' is a day that is not a Saturday or Sunday or a public holiday in the place where you lodge your return.[130]

If you have a monthly PSP the same requirements apply however you must give your return and pay any excise duty on or before the 21st day of the month following the end of the monthly period.[131]

We may also determine a different PSP period if:

  • you do not have any excise duty to pay;[132] or
  • you are an eligible business entity and have a PSP for a monthly period and have advised us in writing that the business has ceased to be an eligible business entity;[133] or
  • the business is included in a particular class of business and have a PSP for a monthly period and have advised us in writing that the business has ceased to be included in the class.[134]

The class of business must be prescribed in the Excise Regulation. The Excise Regulation does not currently prescribe any such businesses.

If we determine a different PSP period we will advise you in writing that your PSP is revoked from the day specified in the notice. We will give you another PSP for a seven-day period.[135]

If you advise us in writing that you wish to change the period of your PSP, we may, in writing, revoke your current PSP and give you permission for the preferred period. We will notify you of the day the change comes into effect.[136]

You do not need to have an excise licence to have a PSP.

Example 6A

Buy Me Pty Ltd does not hold an excise licence. A licensed manufacturer manufactures excisable alcohol products for Buy Me under contract. Under the terms of the contract, Buy Me has title to the goods from the time of manufacture and will pay the excise duty.

Buy Me applies for and is granted a PSP.

The PSP is for the period Monday to Sunday. Therefore, Buy Me is able to arrange delivery of excisable alcohol products into the Australian domestic market and defer payment of excise duty, on those goods, until after the end of that period. On the first business day after the end of the period (i.e. Monday, unless it is a public holiday in which case it will be due on Tuesday) Buy Me must lodge an excise return for any excisable alcohol products delivered during the period and pay the excise duty owing on those goods.

We will send Buy Me written confirmation, after the excise return has been processed.

6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?

Under prepayment, the duty is paid before the excisable alcohol products are delivered into the Australian domestic market.

If you do not hold a PSP, you must receive a Delivery authority from us before you are allowed to deliver the excisable alcohol products into the Australian domestic market. We require you to pay any applicable duty before we give you a Delivery authority. To request a Delivery authority you need to lodge an excise return (NAT 4285).

That is, you must:
  • lodge an excise return
  • pay the relevant duty, and
  • receive a Delivery authority from us.[137]

You must not deliver excisable alcohol products into the Australian domestic market before receiving the Delivery authority.

6.3.4 WHEN IS DUTY NOT PAYABLE?

There are circumstances in which no duty will be payable. These include where:

  • goods are classified to an item or subitem with a FREE rate of duty
  • goods are exported
  • a remission circumstance applies, or
  • excisable alcohol products that are subject to our control are used in the manufacture of other excisable alcohol products.

6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAY?

To work out how much duty you need to pay you will need to:

  1. check whether your alcohol products are excisable alcohol products according to the Schedule to the Excise Tariff Act[138] and identify the correct duty rate
  2. work out the volume of alcohol subject to duty, in each tariff subitem, that you deliver into the Australian domestic market

    1. Total volume × (strength - 1.15%)[139] = dutiable litres of alcohol for beer
    2. Total volume × strength = dutiable litres of alcohol for all other excisable alcohol products
  3. multiply the dutiable litres of alcohol by the rate of duty on the excisable alcohol products, and
  4. add up the total for each subitem to work out total duty to be paid.

Further information on these steps is set out below:

(i) Classifying excisable alcohol products

The Schedule to the Excise Tariff Act lists those goods that, if manufactured or produced in Australia, are subject to excise. The Schedule also contains the rate of duty applicable to the goods. For excisable alcohol products the relevant part of the Schedule as of 5 August 2019 is:

 

Tariff Item

Sub item

Unit

Description of Goods

Rate

 

1

 

 

Beer

 

 

1.1

LAL

Beer not exceeding 3% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$43.53 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.2

LAL

Beer not exceeding 3% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$8.71 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.5

LAL

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.70 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.6

LAL

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$27.26 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.10

LAL

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.700 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.11

LAL

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$35.71 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.15

LAL

Beer not exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.06 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.16

LAL

Beer exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.53 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

2

 

LAL

Other excisable beverages not exceeding 10% by volume of alcohol

$85.87 per litre of alcohol

 

3

 

 

Spirits; Other excisable beverages exceeding 10% by volume of alcohol

 

 

3.1

LAL

Brandy

$80.20 per litre of alcohol

 

3.2

LAL

Other excisable beverages exceeding 10% by volume of alcohol

$85.87 per litre of alcohol

 

 

3.5

LAL

Spirit that:

  1. a person has an approval, under section 77FD of the Excise Act 1901 , to use for fortifying Australian wine or Australian grape must; and
  2. is otherwise covered by the approval

Free

 

 

3.6

LAL

Spirit that:

  1. is for use by a person who is included in a class of persons determined under section 77FE of the Excise Act 1901 ; and
  2. if a quantity is specified in a determination under that section in relation to the person - does not exceed that quantity; and
  3. is for an industrial, manufacturing, scientific, medical, veterinary or educational purpose

Free

 

 

3.7

LAL

Spirit that:

  1. a person has an approval, under section 77FF of the Excise Act 1901 , to use for an industrial, manufacturing, scientific, medical, veterinary or educational purpose; and
  2. is otherwise covered by the approval

Free

 

 

3.8

LAL

Spirit denatured according to a formula determined under section 77FG of the Excise Act 1901 , other than spirit for use as fuel in an internal combustion engine

Free

 

3.10

LAL

Spirits not elsewhere included

$85.87 per litre of alcohol

You can find the current excise rates of duty, along with those applicable pre 5 August 2019 on our website.

(ii) Working out quantities of excisable alcohol products

Duty for excisable alcohol products is levied on the quantity of alcohol in the goods and not on the quantity of the goods themselves (e.g. you do not pay duty on the water contained within the product).

Alcohol quantity is measured in litres of alcohol (Lals), which is calculated by measuring the total volume and multiplying it by the strength, after taking into consideration the rules for measuring volume and strength (see section 6.3.6 below).

Example 6B

Bottler Brandies manufacturers high quality brandy for the Australian market.

The dutiable quantity of alcohol in 100 cartons, each containing 12 × 700 ml bottles of brandy, at 37.2% alcohol by volume is:

100 × 12 × 0.7 = 840.0 litres × 37.2% = 312.48 Lals

Example 6C

Bottler Brandies also manufactures brandy, which is used to manufacture brandy and cola (RTD) in 250 ml, bottles for the Australian market.

The dutiable quantity of alcohol in 400 bottles at 5% alcohol by volume is:

400 × 0.25 = 100 litres × 5% = 5.00 Lals

Example 6D

Bevy Brewing manufactures a boutique beer for the Australian market.

The rates of duty for beer specify that duty only applies to the amount of alcohol calculated on the alcohol content above 1.15%. We refer to this amount as the dutiable quantity of beer. The dutiable quantity of alcohol in 100 litres of beer at 5% alcohol by volume is:

100 × (5% - 1.15%) = 3.85 Lals

6.3.6 Rules for measuring volume and alcoholic strength

To work out your alcoholic quantity for excise duty purposes, you should determine the alcoholic volume and strength based on what the volume and strength would have been if the alcohol was measured at a temperature of 20 degrees Celsius.[140] Conversion tables (Practical alcohol tables volume 1, Commission of the European Communities) allow alcoholic strength, as measured by alcoholmeters or alcohol hydrometers, to be converted to the 20 degree Celsius standard.

Legislation allows us to make rules for the measurement of volume and alcoholic strength of excisable goods.[141] These rules are detailed in two legislative determinations and ensure an acceptable degree of accuracy exists in the measurement of volume and strength. They also provide you with certainty that if your procedures and practices comply, then you will be paying the correct amount of duty.

(i) Excise (Volume - Alcoholic excisable goods) Determination 2019

This determination provides guidance on the following key areas of volume measurement:

Sampling and analysis

Sufficient samples must be taken from each production or packaging run to ensure the average fill volume of the samples taken accurately reflects the average fill volume of all the containers.

Measuring and equipment

The volume of alcoholic excisable goods must be measured in accordance with legal requirements pertaining to measurements and must consistently produce an accurate result.

The National Measurement Institute (NMI) website provides information on volume measurement and if required the NMI should be contacted for further information.

Permitted variations

Permitted variations in filling volume for alcoholic goods depend on whether or not the goods are packaged in a bulk container (i.e. a container that has the capacity to have packaged in it more than 2 litres of liquid).

BULK CONTAINER
Volume of contentsDutiable volume
Not nominatedActual volume
Nominated and: 
- actual volume does not exceed 101% of the nominated volumeNominated volume
- actual volume exceeds 101% of the nominated volumeActual volume

NOT A BULK CONTAINER
Volume of contentsDutiable volume
Not indicated on the containerActual volume
Is indicated on the container: 
- actual volume does not exceed 101.5% of the indicated volumeIndicated volume
- actual volume exceeds 101.5% of the indicated volumeActual volume

Example 6E

Bottler Brandies needs 100 cartons of brandy to fill an urgent order. As they have no packaged product in stock, they need to bottle some brandy. They use a flow meter to transfer 850 litres of brandy to their bottling tank.

Just prior to commencing the bottling operation, they use a calibrated dip stick to check the volume of brandy in the bottling tank. It contains 850 litres. They also check the temperature of the brandy in the bottling tank. It is 18 degrees Celsius. Using their conversion tables, they calculate that the actual volume of brandy in the bottling tank, at 20 degrees Celsius, is 850.85 litres.

During the bottling run, samples are taken and tested by weighing bottles that had earlier been weighed empty and their weights recorded. The average volume of the bottles tested was found to be 705 ml at a temperature of 20 degrees Celsius.

Volume stated on label 700 ml

Actual volume 705 ml

Difference between labelled and actual volume 5 ml = 0.7%

As this product is not packaged in a bulk container, the tolerance for this product is 1.5%. Therefore, the volume of brandy within each bottle is accepted as being 700 ml for this production run (i.e. based on indicated volume, as actual volume did not exceed the 1.5% tolerance).

Example 6F

Bevy Brewing has completed a racking run of 10 kegs of beer.

Each of the kegs has been endorsed with a weight when empty. The actual volume of each keg has been determined by weight and the average volume found to be 52 litres.

In their records, they have nominated that their kegs will be filled with 50 litres.

Nominated volume 50 litres

Actual volume 52 litres

Difference between nominated and actual volume 2 litres = 4%

As this product is packaged in a bulk container, the tolerance for the product is 1%. Therefore, the volume of beer within each keg is accepted as being 52L (i.e. based on actual volume, as the actual volume exceeded the tolerance of 1%)

(ii) Excise (Alcoholic strength of Excisable Goods) Determination 2019

This determination provides guidance on the following key areas of alcoholic strength measurement:

Sampling and analysis

The alcoholic strength must be measured using samples of the alcoholic excisable goods after it has reached its final alcoholic strength.

The following table summarises the point at which strength sampling must occur.

Type of productTime of strength measurement
Packaged alcoholic excisable goodsEither:
  • in the header vessel immediately prior to packaging; or
  • directly from the packaging line
Bulk excisable goodsAny point in time after final alcoholic strength is reached.
Non-commercial beer produced at a BOPSObtained from the test brew of each recipe.

Strength should be re-established where there has been a change to the recipe.

Where sampling is required, sufficient samples must be taken to ensure an accurate actual strength is established.

  • is taken to be the average of the strength of all the sample measurements for that particular alcoholic excisable good;
  • is to be expressed as a percentage, if the alcohol were measured at 20 degrees Celsius; and
  • when calculating volume by reference to the specific gravity of alcohol, the calculation is to be made on the basis that the specific gravity of alcohol in relation to water is 0.79067 (based on a temperature of 20°C and in a vacuum).

Measuring and equipment

The instruments used to measure the alcoholic strength of alcoholic excisable goods, including hydrometers, thermometers and weighing instruments, must conform to legal requirements pertaining to measurement.

The methods that may be used are:

  • gas chromatography;
  • near infra-red spectrometry;
  • distillation followed by the gravimetric measurement of the distillate or by measurement in a density meter; or
  • any other method that consistently produces a similar result by a documented testing process.

Alcohol manufacturers producing less than 100,000 litres of fermented beverages (including beer) in a financial year may use a hydrometer and a formula to determine the alcoholic strength of each fermented beverage, provided the formula is supported by a documented testing process that shows the formula produces accurate results.

Permitted variations

Permitted variations applicable to alcoholic strength are summarised in the tables below.

If actual strength does not exceed the labelled (or otherwise indicated) strength by:Alcoholic strength is:

- 0.2% for alcoholic excisable goods (excluding beer subject to secondary fermentation)

- 0.3% for beer subject to secondary fermentation

Labelled (or otherwise indicated) strength
If actual strength exceeds the labelled (or otherwise indicated) strength by: Alcoholic strength is:

- 0.2% for alcoholic excisable goods (excluding beer subject to secondary fermentation)

- 0.3% for beer subject to secondary fermentation

Actual strength

Example 6G

Bottler Brandies take samples during their bottling run and test the strength. The alcoholic strength of the bottles tested was found to be 37.3% at a temperature of 20 degrees Celsius.

Strength stated on label 37.2%

The difference between labelled and actual strength is 0.1%

The tolerance for this product is 0.2%. Therefore, the strength of the bottles of brandy is accepted as being 37.2%.

Example 6H

Bevy Brewing has completed a racking run of 10 kegs of beer. The beer is not subject to secondary fermentation.

Testing has revealed that the strength of the beer is 5.3%.

In their records, they have nominated that their kegs will be filled at a strength of 5.0%.

The difference between nominated and actual strength 0.3%

As the tolerance for this product is 0.2%, the strength of the beer is accepted as being 5.3% (i.e. the actual strength of the product).

(iii) Calculating duty payable on each excisable alcohol product

The rate of duty is set in the Schedule to the Excise Tariff Act. The rates of duty on excisable alcohol products are subject to change. They are indexed twice a year in accordance with increases in the CPI (usually on 1 February and 1 August).[142] For ease of reference we provide a 'working tariff', incorporating indexation changes, on our website.

The rate of duty you use is the rate contained in the working tariff for the subitem. It will also depend on whether you have a PSP. If you do it is the rate applicable at the time you deliver the excisable alcohol products into the Australian domestic market. If you do not have a PSP, then it is the rate applicable at the time you make the pre-payment.[143]

Precision requirements for calculations and reporting

When calculating quantities, the acceptable level of precision for working out total volume or litres of alcohol (Lals) is two decimal places.

Example 6I

When goods are delivered into the Australian domestic market under a PSP, the rate of duty that applies is the rate in force at the time the goods are delivered.

On 4 February 2019 a manufacturer delivers RTD beverages not exceeding 10% alcohol by volume under its PSP.

The RTDs are 'other excisable beverages' classified to item 2 in the Schedule to the Excise Tariff Act. The rate of duty that applies is the rate in force on 4 February 2019 - $85.36 per litre of alcohol.

Example 6J

When goods are delivered into the Australian domestic market under a prepayment, the rate that applies is the rate in force at the time payment is made.

On 31 January 2019 a manufacturer that does not hold a PSP prepays duty for the delivery of RTD beverages not exceeding 10% by volume of alcohol. The RTDs are delivered on 6 February 2019.

The RTDs are 'other excisable beverages' classified to item 2 in the Schedule to the Excise Tariff Act. The rate of duty that applies is the rate in force on 31 January 2019 - $84.51 per litre of alcohol.

The amount of duty payable is then calculated by multiplying the quantity of excisable alcohol products by the applicable rate of duty.

Example 6K

My Liquor Wholesalers makes the following deliveries during a one week period:

Beer, under subitem 1.1 in the Schedule to the Excise Tariff Act:

Day 1 - 756.23 Lals delivered

Day 2 - 497.54 Lals delivered

Day 3 - 1103.02 Lals delivered

Total = 2356.79 Lals

Brandy, under subitem 3.1 in the Schedule to the Excise Tariff Act:

Day 4 - 985.47 Lals delivered

Day 5 - 899.14 Lals delivered

Total = 1884.61 Lals

The dutiable total for goods delivered under subitem 1.1 is 2356.79 Lals and for goods delivered under subitem 3.1 is 1884.61 Lals.

However, when completing your excise return, the dutiable quantity in Lals for goods classified to a particular tariff item or subitem may be truncated to one decimal place. Truncation to one decimal place means that anything after the first decimal place is disregarded.

Example 6L

Following on from Example 6K, the dutiable total for goods delivered, by My Liquor Wholesalers, under subitem 1.1 in the Schedule to the Excise Tariff Act is 2356.79 Lals and for goods delivered under subitem 3.1 in the Schedule to the Excise Tariff Act is 1884.61 Lals.

On the excise return, My Liquor Wholesalers reports the dutiable totals as:

Subitem 1.1 2356.7 Lals

Subitem 3.1 1884.6 Lals

Excise duty is worked out on the basis of the truncated totals.

Example 6M

Bottler's Gin delivers 100 cartons, each containing 12 × 700 ml bottles of gin, at 37.2% alcohol by volume, into the Australian domestic market on 10 February 2019.

The gin is classified to subitem 3.2 in the Schedule to the Excise Tariff Act and has a duty rate of $85.36 per litre of alcohol (as at 4 February 2019).

Therefore, the duty payable is calculated as follows

100 cartons × 12 bottles × 0.7 litres each = 840.0 litres

840 litres × 37.2% = 312.48 Lals

312.48 Lals truncated to one decimal point = 312.4 Lals

312.4 Lals × $85.36 = $26,666.464.

$26,666.464 of duty is truncated to two decimal points = $26,666.46

(iv) Calculating total duty payable

Duty payments are notified to us by including details on your excise return. Excisable alcohol products classified to different items or subitems in the Schedule to the Excise Tariff Act must be shown separately on your excise return on what are referred to as lines.

Example 6N

My Liquor Wholesalers needs to report deliveries for the period ended 15 February 2019.

On their excise return, My Liquor Wholesalers reports their deliveries and duty liability as:

Line

Tariff subitem

Quantity

Units

Duty rate

Excise amount

1

1.1

2356.7

Lals

$43.27

$101,974.40

2

3.1

1884.6

Lals

$79.72

$150,240.31

TOTAL

 

 

 

 

$252,214.71

What happens if the rate changes during my settlement period?

If the rates of duty change within your settlement period, you may lodge two excise returns or, alternatively, include separate lines for the same product on one return; that is:

  • one return or line for goods delivered under the old rates, and
  • one return or line for goods delivered under the new rates.

Example 6O

The rate of duty per litre of alcohol for other excisable beverages not exceeding 10% by volume of alcohol (item 2 in the Schedule to the Excise Tariff Act) increases on and from 4 February 2019 (a Monday) from $84.51 to $85.36.

Beverage2Go is a licensed excise manufacturer of RTDs classifiable to item 2 in the Schedule to the Excise Tariff Act and holds a PSP with a settlement period that commences each Saturday.

Beverage2Go delivers RTDs containing 189.5 Lals on Sunday 3 February and RTDs containing 1,041.3 Lals over the course of the next few days.

In its excise return for Saturday 9 February, Beverage2Go uses separate line entries for RTDs delivered at the old rate and at the new rate:

Line

Tariff item

Quantity

Units

Duty rate

Excise amount

1

2

189.5

Lals

$84.51

$16,014.64

2

2

1041.3

Lals

$85.36

$88,885.36

Alternatively, on Saturday 9 February, Beverage2Go uses separate excise returns for RTDs delivered at the old rate and at the new rate:

Line

Tariff item

Quantity

Units

Duty rate

Excise amount

1

2

189.5

Lals

$84.51

$16,014.64

and

Line

Tariff item

Quantity

Units

Duty rate

Excise amount

1

2

1041.3

Lals

$85.36

$88,885.36

How can the rate change?

In addition to indexation, as described above, the applicable rate of excise duty can also be affected by:

  • changes to the Excise Tariff Act (including tariff proposals), or
  • quotas.

Changes to the Excise Tariff Act

Where the Government decides to change the rate of excise applying to excisable goods, or to apply excise to new goods or stop applying excise to certain goods this requires an amendment to the Excise Tariff Act. The Government normally notifies the intention to do this with a tariff proposal.

For more information on tariff proposals refer to Section 1.3.1 Excise Tariff Act of this guide.

Quotas

Quotas are a means of ensuring that people cannot gain an advantage by anticipating rises in excise rates and then delivering more excisable alcohol products than they would normally. Effectively quotas restrict the quantity of excisable alcohol products you can deliver into the Australian domestic market at the existing excise rate. If you exceed your quota for the period you will need to pay the duty at the new rate.

Where we believe that persons are anticipating an increase in the rate of duty, and as a result the clearances of excisable alcohol products in a particular period is likely to be greater than it otherwise would be, we will publish a notice in the Commonwealth Gazette. This notice will state that a particular period is a 'declared period'.[144]

The 'declared period' is the period during which quotas will operate. To establish your quota for the declared period we will consider the amounts of your past deliveries.[145]

Once we have established your quota we will give you a written quota order that specifies the maximum level (which can be nil)[146] of excisable alcohol products that you can deliver into the Australian domestic market at the applicable excise rate in force during the declared period.

If at any time during the declared period you exceed your quota you are required to pay the duty on the excess goods at the existing rate, and in addition we may require you to pay a security, by cash deposit, equal to the duty on the excess goods.[147]

If you have a PSP and you have exceeded your quota then the PSP stops being the authority for you to deliver goods during the declared period.[148] This means you will need to prepay the duty on any further deliveries into the Australian domestic market during the declared period.

At the end of the declared period we will reconcile your deliveries with your quota. If you delivered into the Australian domestic market more than your quota, then the duty for the amount in excess of the quota is calculated at the rate in force the day after the declared period ends. Therefore if the rate has gone up you will pay the higher rate of duty on the amount in excess of your quota.

We can vary or revoke a quota order any time before the end of the declared period or 60 days after the making of the quota order whichever occurs last.[149]

6.3.7 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?

If you dispute:[150]

  • the amount of duty
  • the rate of duty, or
  • the liability of goods to duty (for example, whether the goods are excisable)

you may deposit with us the amount of duty demanded.

The deposit of this duty is to be made on an excise return. The excise return should be accompanied by a letter which sets out the details of the dispute. Upon receipt of the amount deposited we will authorise delivery of the goods. You have 6 months after making the deposit to commence court action. If that action is decided in your favour we are obliged to refund you the deposit along with interest of 5% p.a. If the action is not commenced within 6 months or the court does not find in your favour the amount deposited is taken to be the correct amount of duty.

However, you may not commence court action if you have a taxation objection under Part IVC of the Taxation Administration Act 1953 against a private ruling and the matter of the objection:

  • relates to the amount or rate of duty; or
  • the liability of the goods to duty; and
  • the matter of the objection is also in dispute.

These disputes do not apply to changes brought about by a tariff proposal.

For more information on tariff proposals see Section 6.3.5 - How do I work out the amount of duty to pay?

Section 154 of the Excise Act does not apply in cases where we are of the opinion that any evasion of the Excise Act has been committed or attempted.

As authority to deliver the goods is a consequence of making the deposit we consider that this means that section 154 does not apply to goods delivered under a PSP.

6.3.8 DO I HAVE TO ACCOUNT FOR EXCISABLE ALCOHOL PRODUCTS?

Where you have or had possession, custody or control of any excisable alcohol products[151] (subject to our control), you have to be able to satisfactorily account for them.

If we ask you to account for excisable alcohol products, and you cannot satisfactorily do so, then you may be required to pay an amount equal to the duty. If we require this payment you will be given a written demand. The amount you are required to pay is calculated using the rate of duty in force on the day the demand is made.

When requested to account for excisable alcohol products you must be able to show that:

  • the goods are still at your premises
  • duty has been paid
  • duty was not payable (for example, where a remission applied), or
  • the goods have otherwise been dealt with in accordance with the excise law (for example, moved under a movement permission or included on an excise return at a concessional rate).

Even where you are able to account satisfactorily for the goods, you may be required to pay an amount equal to the duty if you failed to keep the goods safely. This would include where the goods were:

  • given away for promotional purposes
  • stolen from licensed premises, or
  • delivered into the Australian domestic market under the mistaken belief that they were not excisable, including those where WET has been paid.

Our decision to demand payment is a reviewable decision.[152]

For information about your review rights refer to Chapter 8 - Reviews and objections.

6.3.9 STOCK MANAGEMENT

You are required to keep your excisable goods safely at all times, and properly account for them should you be requested by the Commissioner to do so.

You will only be able to evidence that you have kept your excisable goods safely, and you will only be able to properly account for your excisable goods if you have adequate stock management practices, and you have kept proper stock management records.

Unless you are subject to specific conditions to the contrary, the following section outlines what you need to do if you identify a shortage and/or surplus of stock on-hand, and how you should manage duty-paid goods returned to stock.

Managing stock shortages and surpluses

Shortages

Following a stocktake, where your record of underbond stock on-hand of a particular excisable good exceeds the actual underbond stock you physically have on-hand, you have a stock shortage. A stock shortage indicates that underbond goods have been delivered into home consumption without them being recorded as having been delivered. That is, excisable goods have been delivered without excise duty being paid on them.

Depending on the circumstances, you need to report the amount of your excise liability for the shortage in one of the following ways:

  • Excise amendment form - Where you can identify that the shortage arose in a particular settlement period, you can report the amount of the excise duty payable on the shortage on an Excise amendment form. You must reference the number of the original return on the amendment form and pay duty on the shortage at the rate in force at the time you lodged the original return.

    To obtain an Excise amendment form (NAT 4286):
    • visit our website at www.ato.gov.au, or
    • phone 1300 137 290.


    For more information about completing your Excise amendment form refer to the Excise amendment instructions available on our website.
  • Current excise return - Where you are unable to attribute the shortage to a particular settlement period, you need to report the excise shortfall resulting from the shortage in the next Excise return you lodge (for the period in which the shortage was identified), and pay duty on the shortage at the rate in force at the time the shortage was identified.

Once you have reported and paid excise duty on the shortfall in one of the ways set out above, you can then adjust your stock records to reflect the quantity of underbond goods physically on-hand.

Surpluses

Where actual underbond stock you physically have on-hand exceeds your record of underbond stock on-hand, this indicates that excisable goods have been manufactured or received without being recorded in your records. To ensure the correct amount of duty is ultimately paid, your stock records should be adjusted to reflect the actual underbond stock you physically have on-hand.

Offsetting

Offsetting is a method you can use to determine the net excise duty that should be reported on an excise amendment form or on your current excise return. Offsetting only applies to the amount of excise duty that applies to goods on a dollar ($) duty basis.

Where you have a surplus of underbond stock, it is possible that you may have recorded the wrong stock as having been delivered to a customer and paid excise duty accordingly. It would follow that a reconciliation of your stock records and actual stock on-hand will show a surplus of one stock item and a shortage of another. Where you can establish that the difference is due to a mistake of this kind, you can generally offset the shortage in excise duty against the excise duty for the surplus stock in your records.

If you have a net excise duty surplus after offsetting the excise duty component of your surplus stock against the excise duty component of the shortage, you can simply adjust your records accordingly.

If you have a net excise duty shortage after offsetting the excise duty component of your surplus stock against the excise duty component of the shortage, you must report and pay the net excise duty shortage. Instructions on how to report and pay duty on a stock shortage (which includes an offsetting shortage) are set out above under 'Shortages'.

Restrictions on offsetting

Offsetting may be applied generally across excisable alcoholic goods. For example, beer, spirits, liqueurs and other excisable beverages may be offset against each other.

To avoid becoming liable to excise duty twice, offsetting is only permitted against underbond excisable stock. That is, you must not offset underbond goods against returned duty-paid goods. Refer to, 'Returning duty-paid goods to stock' below for information on what you need to do where duty-paid goods are returned to you (because, for example, they were mis-picked or the customer over-ordered).

You are also not permitted to offset a shortage/surplus of underbond excisable stock against a shortage/surplus of imported goods.

Importantly, offsetting cannot be applied to overcome deficiencies in record keeping or manufacturing processes. If your record keeping is found to be unsatisfactory, the ATO may issue a demand for an amount equivalent to the excise duty. This may result in you being personally liable for an amount equivalent to the excise duty.

Example 6P

On 30 June 2019, My Liquor Wholesalers finalises a stocktake and finds there is a surplus of 1500 cans of Brand × underbond beer at 5% by volume of alcohol and a shortage of 2000 cans of Brand Y underbond beer at 5% by volume of alcohol. All cans have a capacity of 375ml and the beer is manufactured in Australia.

My Liquor Wholesalers is able to offset the excise duty on the surplus stock against the excise duty on the shortage. This results in net excise duty payable.

My Liquor Wholesalers corrects its book stock to take up the surplus floor stock of 1500 cans of Brand × beer.

My Liquor Wholesalers was unable to identify the settlement period in which the stock shortage arose. As such, My Liquor Wholesalers needs to report the excise duty payable on the net shortage of 500 cans on its next excise return (for its settlement period covering 30 June 2019), and pay the duty on the 500 can shortage based on the rate in force on 30 June 2019. My Liquor Wholesalers can then write off the shortage of 2000 cans of Brand Y beer in its records.

Example 6Q

Continuing on from Example 6P, a couple of months later My Liquor Wholesalers decides to conduct another stocktake. They find a surplus of 2500 bottles of 700ml Brand A underbond rum at 38% by volume of alcohol and a shortage of 1000 bottles of 700ml Brand B underbond whisky at 38% by volume of alcohol. The beverages are manufactured in Australia.

My Liquor Wholesalers decides to offset the excise duty on the surplus stock against the excise duty on the shortage. Therefore, there are no bottles that have not been accounted for but there is a net excise duty surplus relating to the Brand A underbond rum.

My Liquor Wholesalers corrects its records to reflect the excise duty relating to the surplus floor stock of 2500 bottles of rum less the excise duty relating to the shortage of 1000 bottles of whisky. In this case there is no shortfall in the payment of the duty.

Example 6R

Spawn Brewery manufactures a Pale Ale at 5% alcohol and sells ten kegs to customers in April 2019. The kegs have a 50ltr capacity. Spawn Brewery lodges its excise return on 21 May 2019 and pays the duty.

Of the ten kegs sold, five kegs are returned by a customer on 22 May 2019 due to them over-ordering. Spawn Brewery keeps a record of the returned goods and the goods are physically moved back to the same location where the underbond Pale Ale is stored.

On 30 May 2019 Spawn Brewery sells 40 units of its 50ltr Pale Ale kegs (all of which are 5% alcohol). Because the kegs being delivered are precisely the same type of product and in precisely the same volume of container (50ltr kegs) as the previously returned duty-paid kegs, Spawn Brewery may treat the sale of the first 5 kegs of Pale Ale as being the sale of duty-paid goods, and reduce its records of stock on-hand of returned goods accordingly.

On 21 June 2019, when calculating the excise duty payable on sales in May 2019, Spawn Brewery will pay excise duty on the sale of 35 kegs of its Pale Ale. The remaining 5 kegs that were sold are treated as the sale of duty-paid goods. All subsequent sales of excisable goods will be subject to excise duty.

6.4 PROCEDURES

6.4.1 HOW DO I GET A PSP?

If you apply for a manufacturer or storage licence, you can use your application form to indicate whether you intend to pay excise duty either periodically or prior to delivery. You do not need to complete a separate PSP application.

If you do not have a licence, or you originally chose not to pay excise duty periodically, contact us and provide us in writing your:

  • licence details (if you have one), and
  • reasons for applying for a PSP.

If we approve your PSP, we will notify you in writing within seven days of receiving your request.

A PSP is not transferable to another person and remains in force until revoked.

A request to add or delete delivery establishments from a PSP is treated as a request for a new permission. However, your PSP number will remain unchanged.

We may also:

  • refuse to grant a PSP
  • impose conditions on a PSP, or
  • cancel a PSP.

Failure to comply with a condition may result in the cancellation of the PSP.[153] In such an instance, we would take into account a variety of factors, including your payment history.

A decision to refuse, impose conditions on, or to cancel a PSP is a reviewable decision.[154]

For information about your review rights refer to Chapter 8 - Reviews and objections.

For more information about PSPs, contact us by phoning 1300 137 290 or emailing us at alcohol@ato.gov.au.

6.4.2 WHAT DOES MY PSP INCLUDE?

Your PSP in relation to excisable alcohol products will include:

  1. permission to deliver excisable alcohol products into the Australian domestic market
  2. conditions, such as:
    • settlement period - the period specified during which goods can be delivered[155]
    • the type of goods that may be delivered from each premises,
    • quantity limits (if any)
    • when you must pay the duty
    • how you must pay - permitted methods (e.g. EFT, cheque, at a Post Office)
    • when and how to lodge your excise return, and
    • record-keeping requirements
  3. a schedule listing:
    • one or more premises from which deliveries may be made.

Example 6R

A PSP specifies a settlement period starting on Saturday and ending on Friday. It states that excise returns must be lodged by 4 pm on the first business day after the end of the settlement period. It also says that the duty on deliveries made during the settlement period must be paid at the same time as the excise return is required to be lodged.

An excise return must be lodged, and the duty paid, by 4 pm on Monday for all goods delivered during the settlement period.

When a public holiday falls on a Monday, the excise return is due for lodgment and duty is to be paid by 4 pm on Tuesday, the next business day.

Where you have deliveries in different states of Australia there may be different public holidays in those states. If your returns are prepared by an office in a state different from that in which the delivery into the Australian domestic market occurs, lodgment is due on the next business day in the state where the return is prepared.[156]

6.4.3 WHAT MUST I DO TO DELIVER ALCOHOL PRODUCTS INTO THE AUSTRALIAN DOMESTIC MARKET?

Delivery under periodic settlement permission

If we provide you with a PSP, you must take the following steps to deliver excisable alcohol products into the Australian domestic market:

  1. deliver the alcohol products into the Australian domestic market: (the products are now no longer subject to excise control)
  2. complete and submit your excise return in accordance with the timeframes in the permission, and
  3. pay the duty to us in accordance with the timeframes in the permission.

Delivery after prepaying the excise duty

If you do not have a PSP, you must take the following steps to deliver excisable alcohol products into the Australian domestic market:

  1. complete and submit your excise return
  2. pay the duty to us
  3. obtain a Delivery authority from us, and
  4. deliver the alcohol products into the Australian domestic market.

6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?

You can lodge your excise return (NAT 4285) via:

the Business Portal

fax at 1300 131 456,
mail to
Australian Taxation Office
PO Box 3007
PENRITH NSW 2740

You can pay excise duties:

  • by electronic funds transfer, including direct credit and BPAY
  • in person at a Post Office,
  • by credit card; or
  • by mail (cheque or money order).

If you are required to pay your other tax debts electronically, you must also make your payment for excise duty by electronic funds transfer.

If you pay the excise duty at a Post Office, you must use a payment advice. To obtain a payment advice booklet, phone us on 13 72 26 or 1800 815 886 and supply us with your Australian Business Number (or Excise Identification Number) and client account number.

Lodgment of an excise return and payment of any duty must be made by the day and time stated on your PSP.[157]

Failure to pay on time may result in the cancellation of your PSP.

To obtain an excise return (NAT 4285):

For more information about completing your excise return refer to Excise return instructions, available on our website.

6.4.5 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on payment of duty contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?

The following are the penalties that may apply after conviction for an offence.

Move, alter or interfere

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[158]

Deliver

If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[159]

Evade

If you evade payment of any excise duty which is payable, the maximum penalty is five times the amount of duty on the excisable alcohol products or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[160]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[161]

6.6 TERMS USED

Deliver into the Australian domestic market

[162]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[163]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.[164]

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Remission

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture, in prescribed circumstances.

For more information about remissions see Chapter 7 - Remissions, refunds, drawbacks and exemptions.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

6.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

6.7.1 Excise Act 1901

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 58 - Entry for home consumption etc.

Section 59 - Payment of duty

Section 59A - Declared period quotas - effect on rates of Excise duty

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 65 - Rules for working out the volume or weight etc. of excisable goods

Section 77FA - Excise duty to be paid according to labelled alcoholic strength of certain beverages

Section 114 - Time for commencing action

Section 120 - Offences

Section 154 - Deposit of duty

Section 162C - Review of decisions

6.7.2 Excise Tariff Act 1921

Section 5 - Duties of excise

Section 6A - Indexation of rates of duty

The Schedule

6.7.3 Crimes Act 1914

Section 4AA - Penalty units

6.7.4 Taxation Administration Act 1953

Part IVC

07 REMISSIONS, REFUNDS, DRAWBACKS & EXEMPTIONS

7.1 PURPOSE

7.2 INTRODUCTION

7.3 POLICY AND PRACTICE

7.3.1 WHEN CAN I APPLY FOR A REMISSION OF EXCISE DUTY?

7.3.2 WHEN CAN I APPLY FOR A REFUND OF EXCISE DUTY?

7.3.3 WHEN CAN I APPLY FOR A DRAWBACK OF EXCISE DUTY?

7.3.4 WHAT HAPPENS IF I AM OVERPAID A REFUND OR DRAWBACK?

7.3.5 WHEN ARE EXCISABLE ALCOHOL PRODUCTS EXEMPT FROM EXCISE DUTY?

7.4 PROCEDURES

7.4.1 HOW DO I APPLY FOR A REMISSION OR REFUND?

7.4.2 HOW DO I APPLY FOR A DRAWBACK?

7.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

7.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS, REFUNDS, DRAWBACKS AND EXEMPTIONS?

7.6 TERMS USED

7.7 LEGISLATION (quick reference guide)

7.1 PURPOSE

This chapter deals with:

  • when you can apply for a remission, refund or drawback
  • what happens if you are overpaid a refund or drawback
  • when alcohol products are exempt from excise duty
  • who can access alcohol products free of excise duty
  • how to apply for a remission, refund or drawback, and
  • penalties that can apply to offences in relation to remissions, refunds, drawbacks and exemptions.

7.2 INTRODUCTION

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture.

A refund is the repayment of duty that has already been paid.

A drawback is a repayment of duty already paid. It is similar to a refund, but applies where duty-paid goods are exported.

In some circumstances the duty you pay on goods may be subject to a complete or partial refund or drawback.[165]

7.3 POLICY AND PRACTICE

7.3.1 WHEN CAN I APPLY FOR A REMISSION OF EXCISE DUTY?

You can apply for a remission of excise duty payable on your excisable alcohol products if the following circumstances apply while the goods are subject to excise control:

Where the alcohol products have deteriorated or been damaged, pillaged, lost or destroyed, or become unfit for human consumption

[166]

'Pillaged' means to strip of money or goods by open violence, as in war; plunder.[167] This does not cover simple cases of theft.

'Lost' in this context does not simply mean can't be found. For example a tank may spring a leak and it is known that the alcohol has drained away. The alcohol has been lost.

Brewers no longer need to apply for a remission to destroy beer they manufacture that is damaged or not fit for consumption if:

  • they destroy less than (or equal to) 125 litres of pure alcohol in a quarterly period;
  • the goods are under our control; and
  • they haven't paid excise duty on them.

Brewers must keep detailed record of the goods they destroyed and be able to present them to us upon request.

For more information about payment of duty see Chapter 6 - Payment of duty.

The approval of a remission does not constitute permission to remove goods from an excise establishment prior to destruction. Off-site destructions require a movement permission from us.

For more information refer to Chapter 5 - Movement permissions.

Example 7A

A pallet of bottled beer is dropped inside the brewery's bond store, damaging the contents. The brewery applies for a remission of duty on the damaged goods. On receiving approval, the brewery destroys the damaged goods and retains records of the destruction.

RTDs containing milk products remain unsold in a manufacturer's licensed premises and have deteriorated to a point where they are unfit for human consumption. The manufacturer applies for a remission of duty on the RTDs. On receiving approval, the manufacturer destroys the unsaleable stock and retains records of the destruction.

Where the goods are not worth the amount of excise duty payable on the goods if delivered into home consumption

[168]

Example 7B

A brewery produces an excess of product for export to Japan. Due to the labelling the excess product cannot be sold in Australia.

The brewery applies for a remission on the basis that the amount of duty payable on the leftover stock exceeds the value of the stock, because the stock has no commercial value.

On receiving approval, the brewery destroys the unsaleable stock and retains records of the destruction.

The excisable alcohol products are for sale to diplomatic or consular missions and the goods are to be delivered under your PSP.

[169]

Example 7C

A manufacturer receives an order from a diplomatic mission for beer, for official use. The manufacturer delivers the beer, into the Australian domestic market (to the diplomatic mission), under the terms of their PSP. (The terms of the PSP may require the manufacturer to submit an Excise remission (NAT 4289) to us, after delivery of the beer.)

When are excisable alcohol products subject to remission without application?

You can supply excisable alcohol products exempt from duty when they are for official use but not for trade by:[170]

  • the Governor-General or any member of the Governor-General's family
  • State Governors or any member of a State Governor's family
  • the Australian American Foundation (Australian-American Fulbright Commission)
  • the Government of another country, under an agreement between that Government and the Australian Government
  • persons covered by a Status of Forces Agreement, and
  • the personnel of sea-going vessels of the Royal Australian Navy (RAN) or Australian Military Forces (AMF) (see below for more detail).

If you are not certain whether someone falls into one of these categories, you should contact us by phone on 1300 137 290.

Some restrictions apply to alcohol products for the RAN and AMF:

  • The goods must be for consumption by the personnel of sea-going vessels of the RAN or the AMF when:
    • such vessels are in full commission, and
    • the products are consumed on such vessels[171]
    • Only certain excisable alcoholic products are eligible for this concession, including:
      • ale, porter and other beer
      • brandy
      • whisky
      • rum
      • gin, and
      • liqueurs.

RTDs (for example pre-mixed rum and cola or other mixers in bottles/cans) do not qualify for this concession.

To supply alcohol products under these circumstances, you must first ensure the receiver meets the relevant criteria. For example, you should only accept orders, stating that the goods are for official use, on the official stationery, or official order, of eligible people or organisations. You must keep a copy of this documentation.

Brewers can destroy beer they manufactured that is damaged or not fit for consumption for up to 125 litres of pure alcohol in a quarterly period.

You do not have to apply for a remission in these circumstances.

7.3.2 WHEN CAN I APPLY FOR A REFUND OF EXCISE DUTY?

You can apply for a refund of excise duty paid on excisable alcohol products if the following circumstances apply:

  • Duty has been paid on excisable alcohol products, however it is later found that, while the goods were subject to excise control (i.e. while they were at the licensed site), they deteriorated or were damaged, pillaged, lost or destroyed, or become unfit for human consumption.[172]

Example 7D

A manufacturer delivers RTDs into the Australian domestic market and pays duty under its PSP. After the product has gone into the market, it is found that, due to a fault in the packaging, the product is unfit for human consumption. It is evident that the product was unfit for consumption at the time the goods were subject to excise control.

The manufacturer applies for a refund of duty on the RTDs.

Example 7E

A storage licence holder, who does not have a PSP, pays the excise duty on alcohol products in accordance with a pre-payment return. They receive a Delivery authority. Before the alcohol products are removed from the licensed premises, they are destroyed by fire. As the alcohol products were still subject to excise control when they were destroyed, the licence holder can apply for a refund of duty on the alcohol products.

  • Duty-paid alcohol products, while the goods are subject to excise control, are not worth the amount of excise duty paid.[173]

Example 7F

A storage licence holder who does not have a PSP pays the excise duty on RTDs in accordance with a pre-payment return. They receive a Delivery authority. Before the RTDs are removed from the licensed premises they become unsaleable, due to changed packaging requirements, and they cannot be sold (but are not unfit for human consumption). As the RTDs were still subject to excise control when they became unsaleable, the licence holder can apply for a refund of duty on the RTDs.

  • Duty has been paid through manifest error of fact or patent misconception of the law.[174]

This circumstance applies to an error that is evident, obvious or apparent and also in situations where duty has been paid on goods entering the Australian domestic market that are not excisable. In both cases a refund of the duty paid would be payable.

Example 7G

A manufacturer delivers wine based RTDs that are 11% alcohol by volume into the Australian domestic market. The goods were entered under subitem 3.2 on the excise return as 'other excisable beverages exceeding 10% alcohol by volume'. The goods fit the description of wine based products and are subject to WET, but are not excisable.

The manufacturer applies for a refund of the duty paid through patent misconception of the law and pays WET on the goods.

  • Duty-paid goods have been taken up as ship's stores or aircraft's stores.[175]

Ship's stores on overseas ships and aircraft's stores on international flights are not subject to excise duty. Where duty has been paid and the excisable alcohol products are subsequently re-directed for use on ships or aircraft travelling overseas, this refund circumstance may apply.

  • From April 2015, duty paid goods that haven't been used are returned to licensed premises, or to a person authorised by the manufacturer of the goods to receive them on their behalf, and the goods are destroyed, or are subjected to further manufacture or production. [176]

The goods do not have to be returned to the licensed premises of the original manufacturer. The law provides that they may be returned to premises are licensed under section 39A of the Excise Act or to a person authorised by the manufacturer (for example, a destruction facility).

Example 7H

A retailer has cartons of cream based RTDs that have passed their use by date. The retailer returns them to the licensed manufacturer where they are destroyed. The manufacturer claims a refund of the duty that was paid on the goods when they were entered for home consumption.

  • Duty paid goods are sold in the following circumstances:[177]
    • for the official use of diplomatic or consular staff of foreign countries
    • for use by the Government of another country, under an agreement between that Government and the Australian Government and not for trade
    • for the official use of a foreign country under a Status of Forces Agreement with the Australian Government and not for re-sale, or
    • for the official use of an international organisation, or personal use of the holder of a high office of an international organisation, to which the International Organisations (Privileges and Immunities) Act 1963
  • Under the 'excise refund scheme for alcohol manufacturers' (Refund Scheme), licensed manufacturers of beer, spirits and other excisable beverages may be eligible to claim a refund of 60% of the excise duty they have paid on beer, spirits or other excisable beverages they have manufactured, up to a maximum of $100,000 per year.[178]

Excise refund scheme for alcohol manufacturers

The 'excise refund scheme for alcohol manufacturers' (Refund Scheme), replaced the 'brewery refund scheme' with effect from 1 July 2017.

The Refund Scheme applies to licensed alcohol manufacturers who have manufactured and paid excise duty on an alcoholic beverage. The Refund Scheme does not extend to entities that simply use purchased spirit to manufacture alcoholic beverage such as alcopops.

From 1 July 2019, eligible manufacturers are able to claim up to $100,000[179] in any financial year (or a pro-rata amount if they became an alcohol manufacturer after the start of the financial year).[180] Between 1 July 2017 and 30 June 2019, alcohol manufacturers could claim refunds of excise duty to a maximum of $30,000 in a financial year..

Individual claims for refunds are calculated at 60% of the duty paid up to the applicable maximum amount[181] in any financial year (or a pro-rata amount, if the entity became an alcohol manufacturer after the start of the financial year).

What is an alcohol manufacturer?

An 'alcohol manufacturer' is defined[182] as a licensed manufacturer whose manufacturer licence authorises the manufacture of alcoholic beverages.

When is an alcohol manufacturer eligible for a refund of excise duty?

An alcohol manufacturer will be eligible for a refund under the Refund Scheme if:[183]

  • Excise duty has been paid during the financial year on an alcoholic beverage that is manufactured by the alcohol manufacturer; and
  • The duty was paid by the alcohol manufacturer; and
  • The alcohol manufacturer is 'legally and economically' independent (see below) of any other entity that has received a refund for excise duty paid under the Refund Scheme.
  • The amount of refund paid to the alcohol manufacturer does not exceed:
    • If the alcohol manufacturer is an alcohol manufacturer at the start of the financial year - $100,000; or
    • If the alcohol manufacturer first becomes an alcohol manufacturer after the start of the financial year - an amount worked out under the following formula: $100,000 × eligible days, (being the day the entity started as an alcohol manufacturer till the end of the financial year) ÷ 365; and
  • The alcohol manufacturer fermented or distilled at least 70% of the alcohol content of the alcoholic beverage:
    • For example, if the final beverage contains 40% alcohol by volume (400mls per litre) then you must have produced at least 70% (280mls per litre) of the alcohol of the final beverage by fermentation or distillation; and21 parts out of 30 must have been either fermented or distilled by the alcohol manufacturer (being 70% of 30%). The remaining 9 parts out of 30 can be alcohol that has not been manufactured by the alcohol manufacturer; and
  • If the claim for a refund is for excise duty paid on a beverage that has been distilled, the alcohol manufacturer satisfies the 'still ownership test' (see below).[184]

When are alcohol manufacturers legally and economically independent?

Only one alcohol manufacturer in a group of manufacturers that are not legally and economically independent is entitled to receive the refund.

Alcohol manufacturers will be legally and economically independent of one another if they have the capacity to take business decisions independently. While no one factor is decisive, indicators that they may be legally and economically independent of one another include:

  • each manufacturer paying for their use of manufacturing facilities, even if they share use of the same facility (jointly owned premises would not qualify as one party could not act without consent of the other or would be subject to the direction of the other);
  • each manufacturer supervises the production, testing and bottling of its own product without the other alcohol manufacturer being involved in these activities; and
  • each manufacturer develops, labels and sells its own product and uses its own sales network without relying on the other alcohol manufacturer to undertake any of these activities on its behalf.

Examples of where an alcohol manufacturer would not be considered legally and economically independent of another entity include:

  • A distillery is operated by an entity that is a 100% owned subsidiary of another entity that operates another distillery or distilleries; or
  • A brewery is operated by an entity that is related to another entity through a holding company and that other entity operates a brewery or breweries; or
  • A licensed alcohol manufacturer affects the economic or financial position of another licensed alcohol manufacturer by providing a subsidy.

The 'still ownership test'

The 'still ownership test' requires alcohol manufacturers seeking to claim a refund of duty under the Refund Scheme of duty paid on distilled beverages to:

  • have sole ownership of one or more stills that have a capacity of at least 5 litres; and
  • to have at least one of those stills installed and ready to use at the start of the financial year during which the duty to be refunded was paid; and
  • at least one of the stills is used by the alcohol manufacturer during the financial year for the purposes of manufacturing any alcoholic beverages.[185]

However, alcohol manufacturers can disregard the 'still ownership test' if they are within their first two financial years of being eligible under the Refund Scheme (this refers to eligibility in general, not just in respect of distilled beverages).

Example 7I

A licensed alcohol manufacturer is legally and economically independent of any other entity that has received a refund under the Refund Scheme. The alcohol manufacturer claimed a refund for beer it manufactured and on which it paid duty in the 2018 and 2019 financial years. In the 2020 financial year, the alcohol manufacturer is seeking to claim a refund of duty on gin. The manufacturer must meet the still ownership requirements in respect of any refund claimed under the Refund Scheme for the gin. This is because the manufacturer first became eligible to claim a refund under the Refund Scheme for beer in the 2018 financial year. It does not matter that the refunds claimed in the 2018 and 2019 years were not in respect of a distilled beverage.

7.3.3 WHEN CAN I APPLY FOR A DRAWBACK OF EXCISE DUTY?

You can apply for a drawback if you export alcohol products that have had excise duty paid on them.[186]

We will only pay a drawback if:[187]

  • prior to the exportation, you advise us that you intend to claim a drawback. (We can exempt you from this requirement, in writing, either on all claims for drawback or any particular claim.[188])
  • before exportation of the excisable alcohol products on which duty has been paid, the goods are available for inspection by us, and
  • you keep records that show:
    • that duty was paid on the alcohol products (for example invoices), and
    • the alcohol products were exported (for example, an export declaration number or bill of lading)
  • you lodge a drawback claim in the approved form no later than 12 months after the alcohol products were exported,
  • the claim sets out the amount of the drawback and a statement that the goods have not been, or are not intended to be, re-landed in Australia, and
  • the amount of the claim or an aggregate of the claims is at least $50.

The amount of the drawback will not exceed the amount of excise duty that was paid.[189]

Example 7J

A liquor distributor purchases a quantity of duty-paid beer and spirits which it supplies to an entity overseas.

The liquor distributor applies for a drawback of the duty component of the beer and spirits. To support the application, the company provides the ATO with copies of invoices of purchase and the bills of lading, which will include details of the export declaration notice (EDN) number.

7.3.4 WHAT HAPPENS IF I AM OVERPAID A REFUND OR DRAWBACK?

If we overpay you by way of a refund or drawback then you must pay the overpaid amount back. We can demand that you pay back the amount and if you do not repay the amount within the time we specify in the demand we can recover the amount through the courts as a debt due to the Commonwealth.[190]

7.3.5 WHEN ARE EXCISABLE ALCOHOL PRODUCTS EXEMPT FROM EXCISE DUTY?

Excisable alcohol products are exempt from duty if they are:

  • exported
  • sold for use as ship's or aircraft's stores[191]
  • with our approval, delivered as small samples,[192] or
  • subject to remission without application.[193]

What are ship's and aircraft's stores?

Ship's and aircraft's stores are goods for the use of passengers or crew on international journeys (e.g. alcohol for sale to passengers on board a cruise liner).

There are limits on the quantities of excisable alcohol products that are not liable to excise duty as ship's stores:[194]

  • alcoholic beverages (other than beer) must be sold to passengers or crew by the glass or nip.

If you supply ship's or aircraft's stores underbond, you must obtain a movement permission to move the goods from the licensed premises to the place of export.

Can I deliver samples without payment of duty?

Yes, you may be able to deliver small samples of excisable alcohol products without payment of duty and without entry. You must apply to us for approval to deliver any sample without the payment of duty. Your application must:

  • be in writing
  • specify who the sample is for
  • specify the quantity for approval, and
  • specify the purpose of the sample.

A small sample would normally consist of less than a saleable amount or an amount that is suitable for the purpose for which the sample is required e.g. testing and evaluation. Samples of product provided to customers in order to secure an order for that product (pre-delivery samples i.e. samples that arrive separately to the bulk goods), are not considered to be 'samples' that can be approved for delivery without the payment of duty.

You do not include approved samples in your excise return; however, you must keep records of any samples you deliver.

To apply for approval, send your application to us via:

the Business Portal

fax at 1300 130 916,
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

7.4 PROCEDURES

7.4.1 HOW DO I APPLY FOR A REMISSION OR REFUND?

An application for a remission (excluding automatic remissions in clause 2 of Schedule 1) or a refund of excise duty must be submitted in writing. However, Schedule 1, subclause 1(1), paragraph (b) of the Excise Regulation provides that where a remission may be allowed and the goods have been totally lost or destroyed or otherwise ceased to exist an application is not required. Records to substantiate your claims must be maintained and produced when requested.[195]

An application for a refund must be lodged within 12 months after the day when the excise duty was paid for the following refund circumstances: [196]

  • goods that, while subject to the CEO's control, has deteriorated, been damaged, pillaged, lost or destroyed, or become unfit for human consumption
  • goods that, while subject to the CEO's control, are no longer worth the amount of duty paid on them
  • duty was paid on goods through manifest error of fact or patent misconception of the law
  • an alcohol manufacturer is eligible for a refund under the excise refund scheme for alcohol manufacturers.

For all other items listed in the table at clause 1 of Schedule 1 there is no time limit for lodging your application for refund. To ensure the excisable alcohol products do not find their way into the Australian domestic market we may wish to inspect or supervise the disposal of the goods. If underbond goods must be destroyed off site, you must apply for a movement permission to move them from the licensed premises to the place of destruction.

Unless alcohol products have been accidentally destroyed, you should contact us before moving or destroying any that are subject to remission or refund. We will provide you with direction and advise if the goods are to be inspected or the destruction supervised.

For more information about movement permissions refer to Chapter 5 - Movement permissions.

You can elect to have a refund credited to your excise account or paid directly into your bank account.

To apply for a remission, send us a completed Excise remission (NAT 4289). You can use the Excise remission instructions to help you complete this form.

To apply for a refund, send us a completed Excise refund (NAT 4288). You can use the Excise refund instructions to help you complete this form. Applications can also be made on company letterhead as long as all the relevant information is provided.

If you are not satisfied with our decision to refuse your refund or remission, you can request a review of our decision by lodging an objection within 60 days.

For more information about your review rights refer to Chapter 8 - Reviews and objections.

7.4.2 HOW DO I APPLY FOR A DRAWBACK?

To apply for a drawback of duty, send us a completed Excise drawback (NAT 4287) or an application on your business letterhead. You can use the Excise drawback instructions to help you complete NAT 4287.

Your drawback application must be received not later than 12 months after the day on which the goods were exported.[197]

If we refuse to pay your drawback and you are not satisfied with our decision you can request a review of our decision by lodging an objection within 60 days.

For more information about your review rights refer to Chapter 8 - Reviews and objections.

7.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on remissions, refunds, drawbacks and exemptions contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

7.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS, REFUNDS, DRAWBACKS AND EXEMPTIONS?

The following are the penalties that may apply after conviction for an offence.

Evade

If you evade payment of any duty which is payable, the maximum penalty is five times the amount of duty on the excisable alcohol products or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[198]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[199]

7.6 TERMS USED

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • high strength spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[200] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

7.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

7.7.1 Excise Act 1901

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 58 - Entry for home consumption etc.

Section 61A - Permission to remove goods that are subject to CEO's control

Section 64 - Delivery of samples free of duty

Section 78 - Remissions, rebates and refunds

Section 79 - Drawbacks

Section 80 - Recovery of overpayments of refunds, rebates, and drawbacks

Section 120 - Offences

Section 160A - Ship's stores and aircraft's stores

7.7.2 Excise Regulation 2015

Section 10 - Application for remission, rebate or refund of excise duty

Section 11 - Period for making an application for refund or rebate of excise duty

Section 12 - Amount of remission, rebate or refund of excise duty

Section 14 - Drawback of excise duty on goods

Section 15 - When drawback of excise duty is not payable

Section 16 - Conditions relating to drawback of excise duty - general

Clause 1 of Schedule 1- Circumstances in which remission, rebate or refund may be made on application

Clause 2 of Schedule 1 - Circumstances in which remission, rebate or refund may be made without application

7.7.3 Crimes Act 1914

Section 4AA - Penalty units

7.7.4 Corporations Act 2001

Section 46 - What is a subsidiary

08 REVIEWS & OBJECTIONS

8.1 PURPOSE

8.2 INTRODUCTION

8.3 POLICY AND PRACTICE

8.3.1 WHAT ARE INFORMAL REVIEWS?

8.3.2 CAN I OBJECT AGAINST ANY DECISION?

8.3.3 WHEN CAN I SEEK AN EXTERNAL REVIEW?

8.4 PROCEDURES

8.4.1 HOW DO I REQUEST AN INFORMAL REVIEW?

8.4.2 HOW DO I LODGE AN OBJECTION?

8.4.3 HOW DO I REQUEST AN EXTERNAL REVIEW?

8.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

8.5 LEGISLATION (quick reference guide)

8.1 PURPOSE

This chapter deals with:

  • the types of review you can ask for
  • what decisions you can object to
  • how to request an informal review
  • how to lodge an objection, and
  • how to request an external review.

8.2 INTRODUCTION

We will provide you with a clear explanation of any decision we make about your excise affairs. If you need more information about our decisions, contact us using the details we provide when we advise you of our decision.

If you're not satisfied with a decision we've made, you can ask for it to be reviewed by:

If there are several review options, we will explain how these differ. For example, some reviews look at questions of law and others involve checking that we followed the correct process in reaching our decision. Which review option is best will depend on your situation.

8.3 POLICY AND PRACTICE

8.3.1 WHAT ARE INFORMAL REVIEWS?

Under the Taxpayers' Charter, you can seek an informal (internal) review where you believe that we have made a mistake, not complied with the law, or interpreted or applied the law incorrectly.

Your dissatisfaction with our decision may be treated as an informal review, both prior to or after receiving notification of the decision in writing.

An informal review does not waive or defer your rights to object to the decision.

However, if you choose to pursue an informal review, awaiting the outcome of the informal review may prejudice your right to object to the decision and, ultimately, your right for external review. For example, the time allowed to lodge an objection may have expired by the time an informal review is finalised.

This is particularly crucial if the original decision attracts only a 60-day objection period.

8.3.2 CAN I OBJECT AGAINST ANY DECISION?

No, you can only lodge an objection against those decisions contained in sections 39Q and 162C of the Excise Act . These include decisions:

  • made under the licensing provisions of the Excise Act[204] such as:
    • refusal to grant a licence
    • imposing and varying conditions on a licence, or
    • suspension, cancellation or refusal to renew a licence
  • to demand an amount in relation to goods not satisfactorily accounted for[205]
  • to refuse, impose conditions on, or to cancel a PSP[206]
  • relating to a drawback, refund or remission of duty[207]
  • to refuse to give an approval to use spirit for a specified industrial, manufacturing, scientific, medical, veterinary or educational purpose (concessional spirit approval),[208] or
  • to specify conditions in a concessional spirit approval.[209]
  • From 1 July 2010, if you obtain an excise private ruling which is unfavourable, you also have the right to object to the excise private ruling. However, an objection cannot be lodged in the case where the Commissioner has made a decision about the excise duty or other amount payable in relation to those goods that the ruling relates to and the decision is reviewable.

However, if you informally ask us to review a decision we will try to resolve any problems as quickly as possible. If we have made a mistake, we aim to correct our mistake at the least cost to you and the ATO.

8.3.3 WHEN CAN I SEEK AN EXTERNAL REVIEW?

For decisions in relation to an objection, or where there is no right of objection, you may be able to apply to the Federal Court or Federal Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act).

8.4 PROCEDURES

8.4.1 HOW DO I REQUEST AN INFORMAL REVIEW?

To request an informal review, use the contact details we provide to contact the person or area of the ATO handling your case. The review will be conducted by a tax officer who was not involved in making the original decision.

We will advise you of the outcome of our review within 28 days of receiving all the information we need. If we cannot finalise the review within 28 days or we need more information from you, we will contact you within 14 days to obtain the information we need or negotiate an extended reply date.

8.4.2 FACILITATION PROCESS

Facilitation is a process where an impartial ATO facilitator meets with you (and/or your representative) and the ATO case officer/s to identify the issues in dispute, develop options, consider alternatives and attempt to reach a resolution.  The ATO facilitator will be an officer that has not been involved in the dispute and who is independent and impartial.    

A facilitator will not establish facts, take sides, give advice, make a decision or decide who is 'right or wrong'. The facilitator guides the parties through the process and ensures open lines of communication.

You can make a request for facilitation (including via your representative) by emailing facilitation@ato.gov.au. Alternatively the ATO may offer you facilitation to help resolve a dispute.

8.4.3 HOW DO I LODGE AN OBJECTION?

You can lodge an objection by completing an objection form or writing your own objection document. Your objection must:

  • be in writing
  • lodged within 60 days after you receive the notice of the decision, and
  • set out a full and detailed account of the grounds for the objection.[210]

You can also lodge your objection via:

the Business Portal

fax at 1300 130 916,
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

If you do not lodge your objection within 60 days we will not consider your objection, unless you provide the reasons for late lodgment. We will consider these reasons before continuing with the objection process.

If we refuse additional time to lodge an objection, you may have this decision reviewed by the Administrative Appeals Tribunal (AAT).

We will make a decision about your objection within 56 days of receiving all the necessary information. If we need more information or we cannot make a decision within 56 days, we will contact you within 14 days to obtain the information we need or to negotiate an extended reply date.

If you are dissatisfied with the objection decision, there are further review rights available to you. You can:

  • apply to the AAT for a review of the decision, or
  • appeal against the decision to the Federal Court.

To obtain a copy of our objection forms and for more information about how to lodge an objection, refer to How to lodge an objection on our website at www.ato.gov.au

For more information about what to do if you believe your legal rights or the standards outlined in the Taxpayers' Charter have not been met, contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

8.4.4 HOW DO I REQUEST AN EXTERNAL REVIEW?

We suggest you obtain legal advice if you are considering using external review options provided by the AAT or Federal Court.

8.4.5 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on reviews and objections contact us via :

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

8.5 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

8.5.1 Excise Act 1901

Section 39Q - Review of decisions

Section 162C - Review of decisions

8.5.2 Taxation Administration Act 1953

Section 14ZU - How taxation objections are to be made

Part IVC - Taxation objections, reviews and appeals

09 OFFENCES

9.1 PURPOSE

9.2 INTRODUCTION

9.3 OFFENCES

9.4 PENALTIES

9.5 INFRINGEMENT NOTICES

9.6 APPLICATION OF THE CRIMINAL CODE

9.7 TERMS USED

9.8 LEGISLATION (quick reference guide)

9.1 PURPOSE

This chapter deals with:

  • offences under the Excise Act
  • penalties
  • infringement notices, and
  • application of the Criminal Code.

9.2 INTRODUCTION

This chapter is a general discussion on offences. It is not meant as legal advice and you are encouraged to seek independent legal advice in relation to your own individual circumstances.

There are a number of acts or omissions under the Excise Act that are offences.

A conviction for an offence may result in a penalty as provided for within the Excise Act. The penalty provided may be in the form of penalty units, a term of imprisonment or an amount of money calculated by a set formula.

9.3 OFFENCES

Certain acts or omissions are offences under the Excise Act for which penalties are prescribed.

For penalties to apply to an offence (except where an infringement notice has been issued), you must first be convicted of the offence in a court of law following prosecution.

Certain offences under the excise legislation are strict liability offences as defined in section 6.1 of the Criminal Code (Schedule to the Criminal Code Act 1995). Essentially, strict liability means that the offence consists of the physical act or omission only. It is not necessary for the court to find that you knowingly committed, or were reckless or negligent in relation to the act or omission.

Some sections of the Excise Act prescribe the following two levels of offence for similar conduct:

  • a higher penalty applies to an act or omission intentionally or recklessly committed (i.e. where there is a 'fault' element); and
  • a lower penalty applies to the same act or omission on a strict liability basis (i.e. where no 'fault' element needs to be proven).

Example 9A

Section 26 of the Excise Act prescribes that licensed manufacturers are to manufacture in accordance with the Act and their licence.

  1. A licensed manufacturer must not intentionally manufacture excisable goods knowing, or being reckless as to whether, the manufacture contravenes this Act or the manufacturer licence.
  2. Penalty: 2 years imprisonment or 500 penalty units.
  3. A licensed manufacturer must not manufacture excisable goods in contravention of this Act or the manufacturer licence.
  4. Penalty: 100 penalty units.
  5. Strict liability applies to subsection (2).

9.4 PENALTIES

The Excise Act contains many provisions that include a penalty at the foot of the section or subsection. This means that if you are convicted of an offence against the particular provision you can receive a penalty not exceeding the penalty mentioned.[211] The penalty listed is the maximum penalty, but the courts can impose a lesser penalty.

Example 9B

A person manufactures excisable alcohol products without a manufacturer licence. This is a contravention of subsection 25(2) of the Excise Act which says that a person shall not manufacture excisable goods without a manufacturer licence. The penalty at the foot of subsection 25(2) of the Excise Act is 100 penalty units. We bring a court action against the person and the court convicts the person. The penalty cannot exceed 100 penalty units, but it can be less.

As indicated above certain offences provide for alternative penalties, for example subsection 25(1) of the Excise Act provides for a penalty of 2 years imprisonment or the greater of 500 penalty units and five times the amount of duty that would have been payable if the goods had been entered for home consumption. For some offences, if a person is convicted of that offence, the court may impose both penalties.[212]

Where an offence leads to goods being forfeited,[213] conviction by the courts results in the forfeited goods being condemned.[214] This means they are no longer your property and we can dispose of the goods as we see fit.

9.5 INFRINGEMENT NOTICES

We may issue an infringement notice[215] as an alternative to prosecution for unlawfully possessing, or unlawfully selling excisable goods.[216] An infringement notice imposes a penalty of 20 penalty units.

To issue an infringement notice, we must have a reasonable belief that you have committed the offence. Notices must be issued within 12 months of the commission of the offence.[217]

In the event of non-payment, prosecution action would be brought against you.

You cannot be prosecuted for the same offence where an infringement notice has been issued unless the infringement notice is withdrawn.

We can withdraw an infringement notice and if we do so after you have paid the penalty we must refund that to you.

9.6 APPLICATION OF THE CRIMINAL CODE

Chapter 2 of the Criminal Code applies to offences against the Excise Act. However, Parts 2.5 and 2.6, which are in Chapter 2, do not apply.[218] In some courts, excise prosecutions are able to be treated as criminal matters while in other courts they are treated as civil matters. This has an effect on issues such as the burden and standard of proof required.

9.7 TERMS USED

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

9.8 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

9.8.1 Excise Act 1901

Section 5 - Penalty at foot of sections

Section 6B - Application of the Criminal Code

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 116 - Forfeiture

Section 117 - Unlawful possession of excisable goods

Section 117B - Unlawfully selling excisable goods

Section 127A - Alternative penalties

Section 129A - Purpose and effect of this Part (Part XA - penalty instead of prosecution)

Section 129B - When an infringement notice may be issued

Section 129C - Matters to be included in an infringement notice

Section 129D - Due date for penalty

Section 129E - Effect of payment of penalty

Section 129F - Withdrawal of infringement notice

Section 151 - Conviction to operate as a condemnation

9.8.2 Crimes Act 1914

Section 4AA - Penalty units

Section 4D - Penalties

9.8.3 Criminal Code Act 1995

Section 6.1 - Strict liability

Chapter 2 - General principles of criminal responsibility

10 BEER

10.1 PURPOSE

10.2 INTRODUCTION

10.2.1 WHAT IS BEER?

10.2.2 WHAT CATEGORIES OF BEER ARE THERE?

10.3 POLICY AND PRACTICE

10.3.1 EXCISE LIABILITY FOR BEER

10.3.2 WHAT ARE MY RESPONSIBILITIES AS A BREWER?

10.3.3 WHAT RECORDS DO I HAVE TO KEEP?

10.3.4 BREW ON PREMISES SHOPS

10.3.5 WHAT ELSE CAN WE DO?

10.4 PROCEDURES

10.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO BEER?

10.6 TERMS USED

10.7 LEGISLATION (quick reference guide)

APPENDIX A

10.1 PURPOSE

This chapter deals with how excise law applies to beer and discusses:

  • what beer is
  • what categories of beer there are, including beer brewed at home and beer repackaging
  • calibration of vessels and instruments
  • sampling and strength testing
  • contents for excise duty purposes
  • excise liability for beer
  • brewers' responsibilities, including record keeping and production losses
  • refunds and remissions, including the excise refund scheme for alcohol manufacturers and duty paid beer returned to the brewery, and
  • Brew on premises shops.

10.2 INTRODUCTION

10.2.1 WHAT IS BEER?

Beer is defined in the Schedule to the Excise Tariff Act. In summary, a beverage is 'beer' if it is brewed and:

  • is the product of the yeast fermentation of an aqueous extract of predominantly malted or unmalted cereals, but may also contain other sources of carbohydrates
  • contains hops, or extracts of hops, so that the beverage has no less than four International Bitterness Units (IBU's) or other bitters. If it contains other bitters, the beverage must have a bitterness comparable to that of a beverage with no less than four International Bitterness Units
  • may have spirit distilled from beer added to it if that spirit adds no more than 0.5% to the final total volume of alcohol
  • may have other substances, including flavours, containing alcohol (other than beer spirit) added to it but only if that alcohol adds no more than 0.5% to the final total volume of alcohol
  • contains no more than 4% by weight of monosaccharide and disaccharide (sugars)
  • does not contain any artificial sweeteners, and
  • has an alcohol content of more than 1.15% by volume.

IBU's are a recognised measure of bitterness of beer containing hops or extracts of hops.

More information about IBU's is publicly available on the internet.

You should be able to establish whether your product meets the definition of 'beer' for excise purposes from your manufacturing specifications and processes and from standard industry information.

Products that clearly meet the definition will not require testing. However, if you are unsure whether your product meets the definition, you should have one brew tested and as long as you continue to brew that formula, you will not need to undertake any further testing unless directed by the ATO. You will need to do this for each type of beer you make where you are unsure if it will meet the definition.

What records should you keep?

You should keep beer recipe sheets and evidence you have brewed to those recipes. The ATO uses these records to establish:

  • the quantities of raw materials you used to manufacture each type of beer
  • whether or not your beverage meets the definition of beer for excise purposes.

Your beer recipe sheets should include details of the beer type, and the type and quantity of all the following:

  • malt
  • mash ingredients
  • hops
  • other kettle additions
  • any other additions

*Note - if your beverage contains more that 1.15% alcohol by volume but does not fit within the definition of beer, it will be an other excisable beverage.

For more information about the definition of beer or how excise duty applies to it, you can phone the ATO on 1300 137 290

10.2.2 WHAT CATEGORIES OF BEER ARE THERE?

There are three categories of beer. These are:

  1. Home brew that is brewed for non-commercial purposes using non-commercial facilities and equipment.
  2. Beer that is brewed for non-commercial purposes using commercial facilities or equipment such as, brew on premises shops (BOPS).
  3. Any other beer that meets the definition, for example beer brewed for commercial purposes, including repackaging.

Home brewing

Beer produced for non-commercial purposes using non-commercial equipment (home brew) is not classified to an item in the Schedule to the Excise Tariff Act and is therefore not excisable.[219]

You must not sell or offer for sale home brewed beer which has been produced under the home brew exemption (for non-commercial purposes).[220]

Beer brewed in a BOPS

BOPS provide commercial facilities and/or equipment to customers to make beer for their own consumption.

Beer produced in a BOPS must be brewed by the customer for personal use by the customer, and not for sale.

Beer produced in a BOPS is excisable.

for more information about BOPS refer to Section 10.3.4 - Brew on premises shops.

Beer brewed for commercial purposes

Beer is for commercial purposes if it is not home brew or beer brewed in a BOPS.

10.3 POLICY AND PRACTICE

10.3.1 EXCISE LIABILITY FOR BEER

How is beer classified?

The classification of beer depends on three things:

  1. the volume of the container and the design of the container in which the beer is packaged
  2. the alcoholic strength of the beer, and
  3. whether it is for commercial or non-commercial purposes.

Commercial beer subject to a non-concessional rate of duty

Beer packaged in a container less than 8 litres, or between 8 litres and 48 litres and not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations, attracts a higher rate of excise duty.

The following is an extract of the Schedule to the Excise Tariff Act for the three subitems that apply to beer packaged in this way.

Tariff Item

Subitem

Description of Goods

Rate

1

 

Beer

 
 

1.1

Beer not exceeding 3% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$43.53* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.5

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.70* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.10

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container of less than 8 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$50.70 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 5 August 2019. You can find the current rates of duty on our website.

Commercial beer subject to a concessional rate of duty

Beer packaged in a container that exceeds 48 litres capacity, or at least 8 litres but not exceeding 48 litres and subject to specific criteria in relation to the design of the container, attracts a lower rate of excise duty. This applies to:

  • containers exceeding 48 litres,
  • containers of at least 8 litres but not exceeding 48 litres that are designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations, and
  • beer that is delivered for sale over the bar directly from a storage tank.

The following is an extract of the Schedule to the Excise Tariff Act for the three subitems that apply to beer packaged in this way.

Tariff Item

Subitem

Description of Goods

Rate

1

 

Beer

 
 

1.2

Beer not exceeding 3% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$8.71* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.6

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$27.26* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.11

Beer exceeding 3.5% by volume of alcohol packaged in:

  1. (a) an individual container exceeding 48 litres; or
  2. (b) an individual container:
    1. (i) of at least 8 litres but not exceeding 48 litres; and
    2. (ii) designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations

$35.71* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 5 August 2019. You can find the current rates of duty on our website.

Repackaged beer

When excise duty is paid on beer at the rate specified in subitems 1.2, 1.6 or 1.11 in the Schedule to the Excise Tariff Act, and the beer is then subsequently repackaged into sealed individual containers of less than 8 litres, or of at least 8 litres but not exceeding 48 litres and not designed to connect to a pressurised gas delivery system, pump delivery system or other prescribed system, the repackaging is taken to be the manufacture of beer.[221]

The repackaged beer is dutiable at the rate that applies to beer packaged in a container less than 8 litres, or between 8 litres and 48 litres and not designed to connect to a pressurised gas delivery system, pump delivery system or other system prescribed by the regulations. This is in addition to any excise duty already paid at the rate applicable to subitem 1.2, 1.6 or 1.11.

Non-commercial beer (i.e. beer produced at a BOPS)

Separate classifications apply to beer produced at a BOPS, according to strength.

The following is an extract of the Schedule to the Excise Tariff Act relevant to beer produced at a BOPS.

Tariff Item

Subitem

Description of Goods

Rate

1

 

Beer

 
 

1.15

Beer not exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.06* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.16

Beer exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.53* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 5 August 2019. You can find the current rates of duty on our website.

Strength of the beer

As can be seen from the extracts of the Schedule to the Excise Tariff Act above the subitem applicable to the beer is dependent on the strength of the beer.

The requirements for measuring the alcoholic strength of excisable alcoholic beverages are detailed in Excise (Alcoholic strength of excisable goods) Determination 2019. Please refer to section 6.3.6 for further information in relation to strength measurement requirements.

How do I measure the volume?

The requirements for measuring the volume of containers of excisable alcoholic beverages are detailed in Excise (Volume - excisable goods) Determination 2019. Please refer to section 6.3.6 for further information in relation to volume measurement requirements.

For beer manufactured and packaged in kegs, you are required to nominate the volume you intend to fill each keg size. This information is to be provided:

  • in the initial application for a licence, or
  • at any time after a licence is issued, if it is intended to change the fill volumes or introduce other bulk container sizes.

Beer delivered direct to consumers from a storage tank

In some instances beer is manufactured at a brew pub and the beer is pumped from a storage tank (greater than 48 litres) in the underbond area to the bar where it is sold as draught beer. In these instances the classification for this beer is for beer in containers exceeding 48 litres.

Beer used in the manufacture of a non-excisable product

An entity that is licenced to manufacture beer will be required to pay excise duty on the beer if it is used by them as an ingredient in the manufacture of a non-excisable product (e.g. a non-beverage food product). The Excise Act only allows for excisable goods to be used in the manufacture of other excisable goods, and not in the manufacture of non-excisable products,

Where beer used in manufacture is unfit for human consumption (i.e. spoilt beer), the beer can be entered for home consumption with no payment of duty required. However where the beer is fit for human consumption, this does not apply.

How do I calculate how much duty is payable?

All eight subitems in the Schedule to the Excise Tariff Act relating to beer specify that duty is calculated on that alcohol content by which the percentage by volume of alcohol of the beer exceeds 1.15. This means to calculate the dutiable quantity the strength is reduced by 1.15 and then multiplied by the quantity.

Example 10D

The dutiable quantity of alcohol in 100 litres of beer at 5% alcohol by volume is:

100 × (5% - 1.15%) = 3.85 Lals

For the purpose of calculating duty payable, Lals is truncated to one decimal place.

The Lals are then multiplied by the relevant duty rate to determine the duty payable:

3.8 × $34.87[222] = $132.50

10.3.2 WHAT ARE MY RESPONSIBILITIES AS A BREWER?

If you are licensed to manufacture beer you are responsible for the safe custody of all alcohol under your control.[223]

You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable beer. [224]

Where, after we take stock of excisable beer manufactured and the materials you use in the manufacturing process it appears to us, that not all the duty that should have been paid has been paid we can call upon you to account for the shortfall. If you cannot account for this shortfall we can demand that you pay the amount that should have been paid.[225]

If you hold a manufacturer licence, you do not need a separate storage licence to store excisable beer that you manufactured at those premises. You may also store beer that has been manufactured elsewhere by another entity and moved underbond into your licensed premises.

You are also responsible for ensuring that you comply with all conditions of your licence.[226]

For information about storage licences and conditions of licences refer to Chapter 2 - Licensing: Applications.

You must also:

  • ensure beer is only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[227]
  • pay the correct amount of excise duty [228]
  • get permission to move underbond excisable beer[229]
  • ensure that your manufacture complies with the Excise Act and any conditions specified in your licence[230]
  • not manufacture beer at premises that are not specified in your licence[231]
  • give us access to your factory when requested[232]
  • keep your excisable beer safe and accounted for to our satisfaction[233]
  • provide all reasonable facilities to enable us to exercise our powers under the Excise Act[234]
  • provide sufficient lighting, correct weights and scales, and all labour necessary for
    • weighing material received into your factory
    • weighing all excisable beer manufactured in your factory, and
    • taking stock of all material and excisable beer contained in your factory.[235]

For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty.

For more information about obtaining permission to move underbond alcohol products refer to Chapter 5 - Movement permissions.

Production Losses

What are production losses?

Production losses include:

  • any losses that occur after fermentation has taken place (that is when alcohol has been produced and beer becomes accountable), or
  • when a brew is to be destroyed by tipping to waste.

You must be able to account for any losses.[236]

Accurate records of any loss of product must be kept for the period directed.[237] The records should be sufficient to enable comparison between current and historical losses for the same procedures.

We accept that some losses occur during production at various stages including:

  • transfer of product from the fermenter (due to spent yeast being drawn off)
  • filtration
  • transfer between storage tanks
  • reprocessing, and
  • packaging.

How do I calculate packaging losses?

Packaging losses are calculated as follows:

Header tank opening dip

less

  • header tank closing dip
  • volume of packaged product
  • volume of filter losses
  • volume of breakages and leakages
  • volume of samples drawn, and
  • volume of drainings and flushings

equals packaging loss.

Excise duty on minor losses that occur as a normal part of the production or packaging process do not need to be acquitted by means of a remission. However, these losses must be recorded and accounted for in your records.

You must apply for a remission for other losses, such as a bad batch or accidental loss within the storage area.

Spoilt beer

Where beer is unfit for human consumption and is sold for manufacturing purposes, for example for use in vinegar manufacture, it may, with our approval, be removed from your brewery: [238]

  • in containers marked 'spoilt beer'
  • without entry for home consumption, and
  • without the payment of excise duty.

Spoilt beer must be unfit for human consumption and not just out of specification. For example, beer that is merely under-filled or under-strength is not unfit for human consumption.

Automatic remission of up to 125 litres of alcohol per quarter

Where beer is damaged or unfit for human consumption you may destroy it without the need to apply for our permission provided:

  • the amount you destroy is less than (or equal to) 125 litres of alcohol per quarter;
  • the goods are under our control; and
  • you have not paid excise duty on the beer.

10.3.3 WHAT RECORDS DO I HAVE TO KEEP?

It is good business practice to keep suitable and adequate records for your operations. Many of the records you will need to be able to account for your beer production are the same as the records that you would normally keep for your own business purposes.

You must keep records, as directed by us and retain those records for the period directed. Your records must be available for us to inspect when requested. [239]

The information you may be requested to record includes:

  • the amount of excisable beer produced showing all inputs, outputs and waste
  • details of all excisable beer held in your licensed premises
  • all deliveries from your licensed premises
  • details of all duty payments and excise returns, and
  • any refunds and remissions.

Examples of records you may be directed to keep, include:

Raw materials register

A raw materials register is a record of all of the raw materials received into the brewery. It includes the movement of raw materials out of storage and into production.

These records should include:

  • an invoice number
  • the date, type and quantity of the raw material received
  • the opening stock quantity
  • the date, type, quantity and batch number for the raw material sent to production, and
  • the closing stock quantity.

Recipes used

You should maintain beer recipe sheets. We use these as a reference to establish the quantities of raw materials used to manufacture each particular beer. Recipes are also used to verify whether or not a product is 'beer' as defined in the Schedule to the Excise Tariff Act or whether it would be classified as an 'other excisable beverage'.

The minimum details you should include on the recipe sheet are:

  • beer type
  • malt details (type and quantity)
  • mash ingredients (type and quantity)
  • hops details or other bitters details (type and quantity), and
  • other kettle additions (type and quantity).

Brew house records

The minimum details you should keep for brew house records include:

  • the type of beer being manufactured
  • details of lauter tun, mash tun, kettle, and whirlpool
  • batch number and the date on which batch manufacture started
  • quantities of materials used (such as malt and hops)
  • volume of water added to the kettle
  • volume of liquid (wort) transferred to fermentation tanks
  • details of fermentation tanks used, and
  • details of losses incurred during transfer of product.

Fermentation and storage

The minimum details you should keep on fermentation and storage include:

  • date on which liquid (wort) was transferred to fermentation tanks
  • volume of liquid (wort) transferred to fermentation tanks
  • quantity of yeast added to the liquid (wort)
  • details of specific gravity measurements during fermentation
  • dates of specific gravity measurements during fermentation
  • temperature at which specific gravity measurements were made, and
  • fermentation tank details.

Bright beer register

Once fermentation is complete quantities of product transferred into 'bright beer' tanks must be recorded.

Bright beer is an industry term for beer which has been matured, carbonated and filtered and is ready for packaging and drinking.

The minimum details you should keep in the bright beer register include:

  • the date product was transferred into storage tanks
  • the quantity of product transferred into storage tanks
  • whether the product was filtered during transfer
  • the date product was moved out of storage tanks for packaging
  • the quantity and temperature of product moved out of storage tanks for packaging
  • the type of product in the tanks, and
  • details of identifying marks/numbers of tanks used.

Packaged product register

Details of all packaged product should be recorded including the:

  • product type
  • package details (for example type and size of container)
  • opening stock details and date
  • quantities of packaged product as a running total
  • strength of packaged product
  • date on which product moved into store
  • quantities moved into the packaged product store
  • date on which product moved out of store, and
  • quantities moved out of the packaged product store.

Any movement of packaged product should be able to be matched with:

  • invoices
  • external delivery documents, and
  • records of any quantities used on brewery premises.

Other records

You should also maintain records on:

  • details of operational gains and losses
  • details of packaging losses
  • sales invoices and delivery documents
  • details of stocktakes undertaken
  • copies of excise returns
  • under bond movement documents
  • refund and remission approvals, and
  • destruction of goods

10.3.4 BREW ON PREMISES SHOPS

Subitems 1.15 and 1.16 in the Schedule to the Excise Tariff Act relate to beer produced for non-commercial purposes using commercial facilities or equipment. This means the beer is made by the consumer and is not for sale.

Businesses offering commercial facilities or equipment to make beer for non-commercial purposes are commonly referred to as Brew on Premises Shops or BOPS.

Typically, BOPS have a number of brewing kettles, chilling facilities and bottling equipment as permanent fixtures. They also provide beer-making ingredients such as yeast, malt and hops, usually in kit form. BOPS staff are on hand to advise customers in all aspects of beer making.

The customer pays up front for:

  • the ingredients
  • use of the equipment
  • bottles (if needed), and
  • the expertise of the BOPS staff.

The customer is responsible for their own brew. Once the beer is bottled by the customer, about a fortnight after the initial process, the customer takes the beer home for consumption.

How is excise duty calculated on beer from a BOPS?

Excise duty on beer brewed at a BOPS is calculated on each batch (customer's fermenter).

When the strength of each recipe has been established, that strength should be recorded and then used as a standard for that recipe for duty payment purposes.

The ATO generally accepts strength testing for sample or test brews on the following basis.

Excise liability for BOPS is calculated per batch (customer's fermenter). A batch is usually 48-50 litres in volume and the strength of the batch is taken to be a "standard" strength which applies to a particular recipe/beer type, having been verified by previous test brews.

These initial test brews must show consistency in strength test results for each recipe/beer type. For example, when testing beer with target strength of 4.9%, to show consistency, two test brews could be sampled that produce identical results (4.9%). Alternatively, three test brews could be sampled that produce consistent results within .2% tolerance (e.g. 4.7%, 5.0% and 5.1%). Upon examination of the strength testing results, field officers are to make a judgement on whether they consider that consistency in results has been demonstrated.

Once consistency can be shown then this standard strength can be applied to all batches of that particular recipe/beer type. The strength of recipes should only be re-established where is a change to the recipe.

You pay the excise duty to us on either a weekly or monthly basis (once you have a periodic settlement permission) by completing an Excise return (NAT 4285).

To calculate the alcoholic strength of the beer (or other fermented beverages) you may use a hydrometer and formula, unless you produce more than 100,000 litres in a financial year.

If you are a BOPS operator, you are required to maintain sequential batch cards that contain the recipe and strength details for each brew, including test brews.

Excise is payable on the full contents of each fermenter. Bottling is carried out by your individual customers and no allowance is permitted for bottling or packaging losses.

Beer produced in your BOPS that is greater than 3% by volume is classified to subitem 1.16 in the Schedule to the Excise Tariff Act. Beer that is less than or equal to 3% by volume is classified to subitem 1.15 in the Schedule to the Excise Tariff Act.

The current rates of excise duty for beer are detailed in the Schedule to the Excise Tariff Act.

For more information about how to calculate duty payable refer to Section 10.3.1 - Excise liability for beer.

Is excise duty charged on sample and test brews?

If you are a BOPS operator, you may produce sample brews for tasting by customers, whether consumed on the premises or not.

You may also undertake test brews designed to confirm the integrity of your equipment and the results from your recipes.

Sample brews and test brews are not classified under subitems 1.15 and 1.16 in the Schedule to the Excise Tariff Act; they are classified under subitems 1.1 to 1.11 in the Schedule to the Excise Tariff Act depending on their strength and the size of the fermenter.

If the test brew has not been delivered into the Australian domestic market and duty has not been paid the licence holder may apply for a remission of excise duty and approval to dispose of the test brew.

For more information about refunds refer to Chapter 7 - Remissions, refunds, drawbacks and exemptions.

What records do I need to keep?

You must keep records as directed by us and retain those records for the period directed. Your records must be available for us to inspect when requested. [240]

The information you may be directed to record includes:

  • Batch card sequencing (including the recipe, volume and strength details for each brew made)
  • Records of all stock received (pre-packaged recipes, yeast, hops, malt)
  • Details of test brews (remission approval or excise return if test brew not destroyed)
  • Details of sample brews
  • Copies of excise returns.

The specific form of records you maintain is dependent upon the type and scale of your operations. The requirements listed below are indicative of the type of records or data that would ensure that you could account for all of the excisable alcohol products for which you are responsible. They are provided as a guide only.

  • Raw Materials register
    • Malt (malted cereals)
    • Hops, hop extracts, and other bitters
    • Adjuncts (unmalted grains used in brewing beer which supplement the main mash ingredient)
  • Customer brew register
    • Customer identification details, e.g. name, address
    • Date of brew
    • Beer type, i.e. recipe name
    • Beer strength - derived from recipe and BOPS tests brews
    • Beer quantity (litres) - usually a standard 48 or 50 litre quantity
  • Sample and test brew register
    • Brew identification details, e.g. brew number, type, date
    • The raw materials used, to assist with tariff classification (quantity and description, e.g. 5 kg Crystal malt) - these may be located on a recipe sheet
    • Beer quantity (litres) - usually a standard 48 or 50 litre quantity
    • Beer strength - derived from recipe for sample brews and derived from another strength testing methodology for tests brews.

10.3.5 WHAT ELSE CAN WE DO?

Access

We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises. [241] Note: we will usually only seek to enter your premises during normal business hours.

Stop vehicles

We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable alcohol products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle is unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[242]

Search vehicles

We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable alcohol products and that the vehicle has been used, is being used or will be used in the commission of an offence against the Excise Act (and certain offences in the Crimes Act 1914[243] and Criminal Code[244] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[245]

Examine goods

We can open packages and examine, weigh, mark and seal any excisable goods that are subject to excise control and lock up, seal, mark or fasten any plant in or on your factory.[246]

We can also:

  • supervise the manufacture of excisable alcohol products[247]
  • take samples of materials, partly manufactured excisable alcohol products and excisable alcohol products subject to excise control, and alcohol products that we have reasonable grounds for suspecting are excisable alcohol products on which duty has not been paid.[248]

10.4 PROCEDURES

10.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on beer contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO BEER?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[249]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[250]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[251]

Move, alter or interfere

If you move underbond excisable alcohol products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[252]

Note:

This includes moving underbond excisable alcohol products from your premises to any other location or for export.

If your movement of underbond excisable alcohol products does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[253]

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[254]

If your brewery licence has been cancelled, or has expired and has not been renewed, and you remove from the premises any beer on which duty has not been paid, the penalty is a maximum of 50 penalty units.[255]

Deliver

If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[256]

Sell

If you sell excisable alcohol products on which duty has not been paid (unless it is an underbond sale), the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[257]

Records

If you do not keep, retain and produce records in accordance with section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[258]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[259]

Evade

If you evade the payment of any duty that is payable, the maximum penalty is five times the amount of duty evaded or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[260]

Facilities etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[261]

If you do not provide sufficient lighting, correct weights and scales, and all labour necessary for weighing material received into and all excisable alcohol products manufactured in your factory, and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[262]

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[263]

10.6 TERMS USED

Bulk container

A container that has the capacity to have packaged in it more than two litres of liquid.[264]

Container

Any article capable of holding liquids.[265]

Deliver into the Australian domestic market

[266]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[267]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcoholic beverages

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products or excisable alcoholic beverages.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

  • Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[268] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. The written instruction is incorporated into the conditions on the licence.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

10.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

10.7.1 Excise Act 1901

Section 4 - Definitions

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 39D - Conditions of licence

Section 46 - Supervision by officers

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 53 - Responsibility of manufacturers

Section 54 - Liability to pay duty

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 62 - Deficiency in duty

Section 77D - Spoilt beer

Section 77E - Removal of beer when licence ceases to be in force etc.

Section 77FC - Repackaged beer

Section 86 - Officers to have access to factories and approved places

Section 87 - Power to stop conveyances about to leave an excise place

Section 87AA - Searches of conveyances without warrant

Section 91 - Examine all goods

Section 92 - Seals etc. not to be broken

Section 106 - Samples

Section 117A - Unlawfully moving excisable goods

Section 117B - Unlawfully selling excisable goods

Section 120 - Offences

10.7.2 Excise Tariff Act 1921

The Schedule

10.7.3 Crimes Act 1914

Section 4AA - Penalty units

Section 6 - Accessory after the fact

10.7.4 Criminal Code Act 1995

Section 11.1 - Attempt

Section 11.2 - Complicity and common purpose

Section 11.5 - Conspiracy

11 DISTILLATION

11.1 PURPOSE

11.2 INTRODUCTION

11.2.1 WHAT IS DISTILLATION?

11.2.2 HOW IS SPIRIT PRODUCED?

11.3 POLICY AND PRACTICE

11.3.1 ABOUT STILLS

11.3.2 ABOUT MOBILE STILLS

11.3.3 ABOUT ENHANCED DISTILLATION

11.3.4 ABOUT REVERSE OSMOSIS FILTRATION and evaporative perstraction

11.3.5 WHAT RECORDS DO I HAVE TO KEEP?

11.3.6 PRODUCTION LOSSES

11.3.7 WHAT ARE MY RESPONSIBILITIES AS A MANUFACTURER?

11.3.8 WHAT ELSE CAN WE DO?

11.4 PROCEDURES

11.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

11.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO DISTILLATION?

11.6 TERMS USED

11.7 LEGISLATION (quick reference guide)

11.1 PURPOSE

This chapter deals with how excise law applies to distillation and discusses:

  • what is distillation
  • how spirit is produced, and
  • responsibilities of licence holders, including record keeping, and
  • production losses.

11.2 INTRODUCTION

11.2.1 WHAT IS DISTILLATION?

In the alcohol industry, distillation is the separation or purification of mixtures of alcohol and water (for example, in wine or fermented grain mash) by using the different evaporation rates, or boiling points, of the water and the alcohol. As alcohol evaporates at a lower temperature, it vaporises first and, therefore, its separation will start before the water evaporates.

Distillation does not produce alcohol; it is merely a separating or refining process. Alcohol is created through fermentation. Therefore, prior to distillation you must have a base product which already contains alcohol. The distillation of an alcoholic base product produces spirit.

Spirit may contain a number of other components such as essential oils, esters, sulphur dioxide and other alcohols such as methyl, propyl, butyl and amyl. Some of these components are undesirable or undrinkable and must be substantially removed from the mixture. This process involves dividing spirit into a number of parts depending on when that part is produced during the distillation process. These parts may be separated during the initial distillation process or during a redistillation of low wines (spirits from the first distillation run).

The first components that are produced during distillation are known as heads. Heads are the highly volatile components with a lower boiling point than ethanol. The heads vaporise first and therefore condense first.

Heads consist mainly of low molecular weight material or highly volatile compounds. Heads may contain a number of poisonous components, including high levels of methanol, which can be hazardous to health.

Usually, the heads are not desired in the finished product and are run to a different receiver from the rest of the spirit. Once the heads have been produced they are followed by the heart.

The heart consists mainly of ethyl alcohol, some water, small amounts of heads, volatile components, acetate esters of fusel oils, and ethyl esters of fatty acids. This part of the spirit run is the most desirable part and is generally directed to a spirit receiver.

The final part of the spirit to come from the condenser is known as the tails. The tails comprise the least volatile compounds of higher molecular weight with a higher boiling point than ethanol. These compounds are undesirable in the finished spirit and are generally directed to a different receiver from the heart. The tails consist of what are called fusel oils.

Fusel oils are heavier molecular weight compounds, a proportion of which are required to give spirit much of its flavour, but are undesirable in excessive amounts. They generally comprise a mixture of isoamyl, butyl, propyl and heptyl alcohols that are produced as a by-product of fermentation.

The combination of the more undesirable parts of the heads and tails is referred to as feints. Feints are collected in a feints receiver and may be redistilled as they contain some ethyl alcohol.

11.2.2 HOW IS SPIRIT PRODUCED?

Spirit can be produced:

  • in a still
  • in a mobile still, or
  • by enhanced distillation.

11.3 POLICY AND PRACTICE

11.3.1 ABOUT STILLS

What is a still?

A still is an apparatus that uses vaporisation and condensation to separate component substances from liquid mixtures, usually by applying heat.

What controls apply to stills?

All stills come under our control if they have a capacity of:

  • over five litres[269], or
  • less than five litres and are used to distil alcohol.[270]

The capacity refers to the volume of liquid that the still is capable of holding.

If you are not a licensed excise manufacturer you must have our permission, in regard to stills with a capacity of greater than five litres, regardless of what the equipment will be used for, to:

  • make a still
  • move or set up a still
  • sell or buy a still
  • import a still, or
  • have possession, custody or control of a still.

We keep a register of stills over five litres used for distilling spirit and for non-spirit distillation, such as in water or essential oils[271] distillation.

You will have committed an offence and penalties may apply if you do not have the appropriate permission.

Whether or not you are a licensed excise manufacturer you can buy, import, manufacture, dispose of, possess, own or sell a still without permission if:

  • the still has a capacity of five litres or less, and
  • it will not be used to distil alcohol.

You must have an excise manufacturer licence to distil spirits regardless of whether the still is less than or greater than 5 litres capacity.[272]

Feints

Feints are low quality spirits obtained during the distillation process. Feints are the low quality head and tail spirits components obtained during the distillation process.

If feints are not redistilled but are run to waste, they are normally collected over a period of time until you need to dispose of them. If you do not adequately account for them they may be subject to excise duty.

You must include all records relating to feints in distillation records.

Prior to disposal, you need to apply to us for:

  • permission to destroy the feints, and
  • remission of the duty payable on the feints.

Continuing approval to dispose of feints can be sought where disposal is ongoing.

To apply for approval contact us on 1300 137 290 or
write to us at
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

11.3.2 ABOUT MOBILE STILLS

What is a mobile still?

A type of mobile still is a transportable spinning cone column mounted on a truck for processing wine on site. It is designed primarily to:

  • collect wine flavours, and
  • reduce the alcohol content of wine.

What controls apply to mobile stills?

Mobile stills are subject to the stills controls described earlier in this chapter.[273]

Excise manufacture may only be carried on at premises specified in a manufacturer licence. [274] A licence to manufacture excisable goods issued under the Excise Act can specify multiple premises.[275]

If you are the owner or lessee of the premises where a mobile still is operating, and you retain spirit, you must have:

  • an excise storage licence to store the product, or
  • a relevant approval to use it for a concessional purpose such as fortification, and
  • records relating to the spirit.

If you are the mobile still operator, and you retain spirit under the terms of the contract, you must hold a movement permission to move the spirit from the premises at which the distillation occurred.

For more information refer to Chapter 5 - Movement permissions.

Measurement of inputs and outputs

A mobile still should have two flow meters as permanent attachments:

  • one meter to accurately measure input of wine into the mobile still, and
  • one meter to accurately register output of flavours or spirit from the wine charge.

You must keep accurate records of all inputs and outputs.

For more information on record keeping requirements refer to Section 11.3.5 - What records do I have to keep?

11.3.3 ABOUT ENHANCED DISTILLATION

Concentrated flavours and spirit are obtained from the treatment of alcoholic beverages by an enhanced distillation process.

Enhanced distillation is carried out using apparatus such as a spinning cone column or a cyclonic evaporator with separator and condenser. These are used to separate flavours from the original feedstock (flavours are carried in a spirit base). Enhanced distillation may also be used to extract further spirit, and allows evaporation to occur at a relatively low temperature.

The apparatus used in enhanced distillation are stills for the purposes of the excise law. They are therefore subject to the controls over stills.

Concentrated flavours

If spirit based concentrated flavours from the enhanced distillation process are used in the manufacture of other wine or other products for human consumption, you must have approval to use the product free of duty for such purposes.[276] If no approval has been obtained, or if the product is used for a purpose that cannot be approved, concentrated wine flavours are delivered into the Australian domestic market and are classifiable to subitem 3.10 in the Schedule to the Excise Tariff Act and duty is payable.

You must enter spirit based concentrated flavours on your excise return if they are used for an approved purpose (duty free) or otherwise delivered into the Australian domestic market.

Spirit

Spirit drawn off in an enhanced distillation process may be of various strengths. A spinning cone column typically produces a spirit stream of about 50% strength.

With our approval, you may use the spirit free of duty for fortifying wine or for another approved purpose. If you have not obtained our approval, or if the product is to be used for a non-beverage purpose that cannot be approved, the spirit is delivered into the Australian domestic market and is classifiable to subitem 3.10 in the Schedule to the Excise Tariff Act and duty is payable.

If delivered for use as a beverage, the spirit is subject to duty as an other excisable beverage (OEB) exceeding 10% strength under subitem 3.2 in the Schedule to the Excise Tariff Act. If the spirit is used in the manufacture of an OEB not exceeding 10% strength then item 2 in the Schedule to the Excise Tariff Act is applicable.

Spirit delivered for use for an approved purpose or otherwise delivered into the Australian domestic market must be entered on your excise return.

Other products

Other products from an enhanced distillation process may include de-aromatised wine and de-alcoholised residue.

De-aromatised wine is typically about 1% below the strength of the original wine. As it is wine within the definitions of the WET legislation, it is not excisable.

De-alcoholised residue contains less than 1.15% alcohol by volume and is neither excisable nor subject to the WET.

11.3.4 ABOUT REVERSE OSMOSIS FILTRATION AND EVAPORATIVE PERSTRACTION

Reverse osmosis

Reverse osmosis filtration adjusts the alcohol or acidity levels of wine using semi-permeable membranes. For example, a wine with 15% alcohol content may be subjected to reverse osmosis to adjust its alcohol content to 11%.

The process of reverse osmosis is not distillation as it does not involve separation by vaporisation and condensation. However, it is important to recognise that it is a process other than fermentation.

The products of reverse osmosis are called the permeate and the retentate. The permeate is the stream that passes through the membrane and the retentate is the part remaining. The retentate retains wine characteristics, whereas the permeate usually does not.

Where the permeate does not have wine characteristics it may no longer be able to be described as a product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes. Rather, it may be a product of the reverse osmosis process used to create it. Where this is the case, or where for example it is over 22% alcohol by volume, the permeate will not meet the definition of wine under the WET Act.

Where permeate is either blended back with the retentate to make an adjusted wine, or is destroyed, we will not require you to have an excise manufacturer licence or a concessional spirit permit. Otherwise, permeate that is over 1.15% abv and that fails to meet the definition of wine is an 'other excisable beverage' under the Excise Tariff Act and is subject to excise control. You will therefore need an excise licence to produce the permeate or do anything further with it.  

Evaporative perstraction

Instead of distillation, there may also be a second stage in the process of reducing the alcohol content of wine following reverse osmosis, whereby the wine permeate moves on to a membrane comprising small pores and two surfaces. Water runs along the outside surface of the membrane. Alcohol from the wine permeated evaporates at the pores of the surface of the membrane and passes through the membrane. On exit from the pores of the membrane, the alcohol condenses and dissolves or mixes into the water running along the outside surface of the membrane.

The result is that the water is alcoholised, generally (although not always) at less than 10% by volume.

The entire process (reverse osmosis followed by evaporative perstraction) can be performed by mobile or fixed apparatus of varying capacities and can be carried out on a winemaker's premises.

It is the Commissioner's view that the alcoholised water produced as a result of evaporative perstraction (commonly referred to as stripwater) is an excisable good[277]. Consequently, any production of stripwater must be licensed under the Excise Act.

11.3.5 WHAT RECORDS DO I HAVE TO KEEP?

It is good business practice to keep suitable and adequate records for your operations. Many of the records you will need to be able to account for your excisable goods are the same as the records that you would normally keep for your own business purposes.

You must keep records, as directed by us, and retain those records for the period directed. Your records must be available for us to inspect when requested. [278]

The information we would expect to see includes:

  • all receipts into your licensed premises
  • the amount of excisable alcohol products produced showing all inputs, outputs and waste
  • details of all excisable alcohol products held in your licensed premises
  • all deliveries from your licensed premises
  • details of all duty payments and excise returns, and
  • any refunds and remissions.

The specific form of records you maintain is dependent upon the type and scale of your operations. To assist you, we provide the following general overview of record keeping for distillery operations.

Receipts into your licensed premises

If you receive underbond excisable goods, e.g. strip water into your licensed premises, you need to take up the goods in your stock records and retain the movement documentation. Movement permissions are covered in Chapter 5.

Distillery operations - Raw materials

An audit trail commencing with raw material allows us to check stated production against known material usage.

Only principal raw materials need to be recorded, e.g.

  • Wine - for brandy and grape spirit production
  • Fermentable starch and sugar products - for fermentation processes associated with whisky and grain spirit production or rum and molasses spirit production
  • For each principal raw material, we recommend recording:
    • Date
    • Opening stock
    • Quantity received
    • Supplier name
    • Quantity used
    • Running balance

Distillery operations - Manufacture

The feedstock for the distillation process is an alcoholic product.

  • Wash, the alcoholic feedstock for whisky and grain spirit production, or for rum and molasses spirit production, is an excisable product and so you need to check fermentation records of any Wash you produce.
  • Wine, the alcoholic feedstock for brandy and grape spirit production, is not an excisable product if it is subject to Wine Equalisation Tax (WET). You do not have to keep specific excise records on the production of wine subject to WET.

You may record many details as you monitor the fermentation process. For excise purposes, we recommend recording:

  • Batch identification details, e.g. batch number, type
  • The quantity of fermentable product to be fermented (litres)
  • The original gravity of the fermentable product, prior to fermentation.
  • The quantity of fermented product (litres) transferred from the fermenter
  • The final strength of the fermented product

Similarly, you may record many details as you monitor the distillation process. For excise purposes, we recommend recording the following inputs:

  • Date of distillation
  • Still (if more than one still on the licensed premises)
  • Identifying number of the charge (consecutively numbered)
  • Type of alcohol feedstock, e.g. grape wine, sugar, grain.
  • Vessel identification number prior to input to still
  • Quantity of alcohol to the still (litres)
  • Strength of alcohol to the still
  • Litres of alcohol to the still (litres × strength = Lals)

For excise purposes, we recommend recording the following outputs:

  • Vessel identification numbers that the spirit components are piped to
  • Quantity of alcohol (litres) delivered to each of these vessels
  • Strength of alcohol delivered to each of these vessels
  • Litres of alcohol (litres × strength = Lals) delivered to each of these vessels

The calculation of distillation efficiency is as much about your good governance as it is about an excise obligation. The appropriate frequency of the distillation efficiency check will depend upon the nature of your distillation operations. It could be done on a batch by batch basis, weekly, monthly, or seasonally. Ideally everything charged to the still has had an opportunity to be run to a receiving vessel, i.e. so that both inputs and outputs can be accurately measured. The distillation efficiency calculation is:

Total output (litres of alcohol) × 100 = % efficiency

Total input (litres of alcohol) 1

Example 11A

A total of 120,000 litres of wash at a strength of 8.5%, totalling 10,200 Lals is transferred to the still. The still produces 10,000 Lals.

10,000 Lals = 98.04% efficiency

10,200 Lals

If production efficiency falls below historical performance you should investigate the following:
  • leaks in the still or pipes
  • inaccurate readings
  • recording errors
  • bad security and pilfering, and
  • alcohol in the waste material.

Distillery operations - Bulk storage

An audit trail that traces underbond excisable product as it moves in and out of bulk vessels allows you to account for the excisable goods to our satisfaction. Bulk vessels include vats, tanks, casks, intermediate bulk containers and drums.

The transactions under this heading include:

  • Movements from the still to a vessel
  • Movements between vessels
  • Movements to the still
  • Movements out to packaging
  • Movements returned from packaging, e.g. decants, drainings
  • Under bond movements in or out
  • Feints destroyed
  • Manufacture e.g. mixing with other ingredients such as other spirit, caramel, water, colourings, flavourings, or denaturants.

For each vessel, we recommend:

  • Product identification details, e.g. type
  • Date, quantity in (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Date, quantity out (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Date in wood if maturing in wooden vessels, e.g. brandy, rum, whisky,
  • Excise clearance type, e.g. excise return, remission, under bond removal, or to packaging
  • Running balance
  • Losses and gains

Periodic stocktakes are as much about your good governance as they are about an excise obligation. We recommend regular bulk vessel stocktakes to:

  • establish the accuracy of stock records
  • detect omissions or errors in stock records, and
  • identify security issues such as theft, plant and equipment problems.

We recommend that you perform a full survey (volume and strength) of any bulk vessels, other than casks, if there has been no activity within the last three months.

Cask storage does not efficiently allow for accurate periodic stocktakes. Cask losses are normally only ascertained once the contents have been revatted.

As part of the stock reconciliation process, stock records are adjusted to reflect the stocktake results. While bulk losses are not normally subject to call up of duty, you must keep adequate records to account for these losses.

The calculation of maturation efficiency (i.e. cask losses) is as much about your good governance as it is about an excise obligation. The maturation efficiency calculation, expressed as a percentage is:

Lals removed from the cask(s) × 100 = % efficiency

Lals originally in the cask(s) 1

Example 11B

A cask was filled on 1 July 2008 with 237.6 Litres at a strength of 62.5%, totalling 148.5 Lals. The contents of the cask were revatted on 1 October 2012, measuring 216.5 Litres at a strength of 63.1% and totalling as 136.6 Lals

136.6 Lals = 92.0% efficiency

148.5 Lals

If maturation efficiency falls below historical performance you should investigate the following:
  • porous timber
  • slack hoops
  • defective staves
  • loose bungs, or
  • theft

Distillery operations - Packaging

An audit trail that traces underbond excisable product from the bulk vessels through the packaging process and into packaged stock allows you to account for the excisable goods to our satisfaction.

For each packaging run, we recommend:

  • Date of packaging
  • Product identification details, e.g. rum, label strength 37.5%
  • Packaging unit size, e.g. 375ml bottle
  • Total quantity available for packaging (Lals)
  • Actual alcoholic strength
  • Total number of units packaged
  • Average fill per package
  • Product captured and returned to bulk storage, e.g. drainings, flushings (Lals)
  • Samples taken from the packaging line (Lals)

The calculation of packaging efficiency is as much about your good governance as it is about an excise obligation. The packaging efficiency calculation is:

Lals packaged × 100 = % efficiency

Net Lals available for packaging 1

Net Lals available for packaging is calculated as:

  • Total quantity available for packaging (Lals)
    • less Product captured and returned to bulk storage (Lals)
    • less Samples taken from the packaging line (Lals)

Lals packaged is calculated as:

  • Total number of units packaged × Packaging unit size × Label strength

Example 11C

A packaging run of whisky on 1 October 2012 recorded:

700ml bottles, 40.0% label strength

Actual alcoholic strength 40.0%

Total quantity available for packaging 4,000 Lals

Total number of units packaged 13,920 bottles

Average fill per package 701.5ml

Product captured and returned to bulk storage 50 litres at 28.0%a.v. = 14Lals

Samples taken from the packaging line (Lals) 20 bottles = 5.6 Lals

Lals packaged = 13,920 × 700ml × 40%a.v. = 3,897.6 Lals

Net Lals available for packaging = 4,000 less 14 less 5.6 = 3,980.4 Lals

Lals packaged × 100 = % efficiency

Net Lals available for packaging 1

3897.6 Lals × 100 = 97.9% efficiency

3980.4 Lals 1

If packaging efficiency falls below historical performance you should investigate.

Distillery operations - Packaged storage

An audit trail that traces underbond excisable product as it moves in and out of your packaged storage area allows you to account for the excisable goods to our satisfaction.

For each product line, we recommend:

  • Product identification details, e.g. type
  • Packaging unit size, e.g. 700ml bottle
  • Label strength
  • Date, unit quantity in
  • Date, unit quantity out
  • Excise clearance type, e.g. excise return, remission, under bond removal
  • Running balance
  • Losses and gains

Periodic stocktakes are as much about your good governance as they are about an excise obligation. We recommend regular stocktakes to:

  • establish the accuracy of stock records
  • detect omissions or errors in stock records, and
  • identify security issues such as theft, plant and equipment problems.

As part of the stock reconciliation process, stock records are adjusted to reflect the stocktake results. In some circumstances stocktake gains may be offset against unaccounted shortages when calculating duty payable on packaged stock losses.

For more offsetting stock shortages against stock surpluses refer to 6.3.8

Record keeping for mobile stills and other mobile technologies

We recommend the following records:

  • the type, litres, alcoholic strength, and Lals of the feedstock
  • details of the bulk vessels from which the feedstock is delivered
  • opening and closing flow meter readings for each operation
  • litres, alcoholic strength, and Lals of the outputs
  • details of bulk vessels to which the outputs are delivered.
  • litres, alcoholic strength, and Lals of spirit retained at the premises

11.3.6 PRODUCTION LOSSES

What are production losses?

You must be able to account for excisable goods, including any losses, while the goods are subject to excise control.[279]

Accurate records of any loss of product must be kept for the period directed.[280] They must be sufficient to enable comparison between current and historical losses for the same procedures.

Production losses include:

  • discrepancies in quantities of raw materials
  • any losses that occur after manufacture has taken place (that is when alcohol has been produced and spirit becomes accountable), or
  • when an excisable product is to be destroyed by tipping to waste.

We accept that some losses occur during production at various stages including:

  • maturation
  • filtration
  • transfer between storage tanks, and
  • packaging.

How do I calculate packaging losses?

Packaging losses are calculated as follows:

Header tank opening dip

less

  • header tank closing dip
  • volume of packaged product
  • volume of filter losses
  • volume of breakages and leakages
  • volume of samples drawn, and
  • volume of drainings and flushings.

equals packaging losses

Excise duty on minor losses that occur as a normal part of the production or packaging process do not need to be acquitted by means of a remission. However, these losses must be recorded and accounted for in your records.

You must apply for a remission for other losses, such as a bad batch or accidental loss within the storage area.

11.3.7 WHAT ARE MY RESPONSIBILITIES AS A MANUFACTURER?

If you are licensed to manufacture excisable alcohol products you are responsible for the safe custody of all those products that are under your control.[281]

You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable alcohol products.[282]

Where, after we take stock of excisable alcohol products manufactured and the materials you use in the manufacturing process, it appears to us that not all the duty that should have been paid has been paid we can demand that you pay the amount that should have been paid.[283]

If you hold a manufacturer licence, you do not need a separate storage licence to store excisable alcohol products that you manufactured at those premises. You may also store excisable alcohol products that have been manufactured elsewhere by another entity and moved underbond into your licensed premises.

You are also responsible for ensuring that you comply with all conditions of your licence.[284]

For information about storage licences and conditions of licences refer to Chapter 2 - Licensing: Applications.

You must also:

  • ensure excisable alcohol products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[285]
  • pay the correct amount of excise duty [286]
  • get permission to move underbond excisable alcohol products[287]
  • ensure that your manufacture complies with the Excise Act and any conditions specified in your licence[288]
  • not manufacture excisable alcohol products at premises that are not specified in your licence[289]
  • give us access to your factory when requested[290]
  • keep your excisable alcohol products safe and accounted for to our satisfaction[291]
  • provide all reasonable facilities to enable us to exercise our powers under the Excise Act[292]
  • provide sufficient lighting, correct weights and scales, and all labour necessary for
    • weighing material received into your factory
    • weighing all excisable alcohol products manufactured in your factory, and
    • taking stock of all material and excisable alcohol products contained in your factory.[293]

For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty.

For more information about obtaining permission to move underbond alcohol products refer to Chapter 5 - Movement permissions.

11.3.8 WHAT ELSE CAN WE DO?

Access

We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises. [294] Note: we will usually only seek to enter your premises during normal business hours.

Stop vehicles

We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable alcohol products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle is unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[295]

Search vehicles

We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable alcohol products and that the vehicle has been used, is being used or will be used in the commission of an offence against the Excise Act (and certain offences in the Crimes Act 1914[296] and Criminal Code[297] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[298]

Examine goods

We can open packages and examine, weigh, mark and seal any excisable goods that are subject to excise control and lock up, seal, mark or fasten any plant in or on your factory.[299]

We can also:

  • supervise the manufacture of excisable alcohol products[300]
  • take samples of materials, partly manufactured excisable alcohol products and excisable alcohol products subject to excise control, and alcohol products that we have reasonable grounds for suspecting are excisable alcohol products on which duty has not been paid.[301]

11.4 PROCEDURES

11.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on spirits and other excisable beverages contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

11.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO DISTILLATION?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[302]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[303]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[304]

Move, alter or interfere

If you move underbond excisable alcohol products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[305]

Note:

This includes moving underbond excisable alcohol products from your premises to any other location or for export.

If your movement of underbond excisable alcohol products does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[306]

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[307]

Sell

If you sell excisable alcohol products on which duty has not been paid (unless it is an underbond sale), the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[308]

Records

If you do not keep, retain and produce records in accordance with section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[309]

Stills

If you are not a licensed manufacturer you must have our permission, in regard to stills with a capacity of greater than five litres, to:

  • make a still
  • move or set up a still
  • sell or buy a still
  • import a still, or
  • have possession, custody or control of a still.

If you do not have our permission, the penalty is a maximum of 50 penalty units.[310]

Facilities etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[311]

If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable alcohol products manufactured in, your factory and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[312]

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[313]

11.6 TERMS USED

Deliver into the Australian domestic market

[314]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[315]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[316] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. The written instruction is incorporated into the conditions on the licence.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

11.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

11.7.1 Excise Act 1901

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 39D - Conditions of licence

Section 46 - Supervision by officers

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 53 - Responsibility of manufacturers

Section 54 - Liability to pay duty

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 62 - Deficiency in duty

Section 77FF - Spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose - specific approvals

Section 77FK - Offence in relation to stills

Section 86 - Officers to have access to factories and approved places

Section 87 - Power to stop conveyances about to leave an excise place

Section 87AA - Searches of conveyances without warrant

Section 91 - Examine all goods

Section 92 - Seals etc. not to be broken

Section 106 - Samples

Section 117A - Unlawfully moving excisable goods

Section 117B - Unlawfully selling excisable goods

11.7.2 Crimes Act 1914

Section 4AA - Penalty units

Section 6 - Accessory after the fact

11.7.3 Criminal Code Act 1995

Section 11.1 - Attempt

Section 11.2 - Complicity and common purpose

Section 11.5 - Conspiracy

12 SPIRITS AND OTHER EXCISABLE BEVERAGES

12.1 PURPOSE

12.2 INTRODUCTION

12.3 POLICY AND PRACTICE

12.3.1 HOW ARE SPIRITS AND OTHER EXCISABLE BEVERAGES CLASSIFIED?

12.3.2 CONTENTS FOR DUTY PURPOSES

12.3.3 SPECIAL PROVISIONS FOR BEVERAGE SPIRITS - BRANDY, WHISKY & RUM

12.3.4 WHAT ARE MY RESPONSIBILITIES AS A MANUFACTURER?

12.3.5 WHAT RECORDS DO I HAVE TO KEEP?

12.3.6 WHAT ELSE CAN WE DO?

12.4 PROCEDURES

12.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

12.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SPIRITS AND OTHER EXCISABLE BEVERAGES?

12.6 TERMS USED

12.7 LEGISLATION (quick reference guide)

12.1 PURPOSE

This chapter deals with how excise law applies to spirits and other excisable beverages and discusses:

  • how spirits and other excisable beverages are classified
  • contents for duty purposes
  • special provisions for beverage spirits, and
  • responsibilities of licence holders.

12.2 INTRODUCTION

If your alcoholic products are not wine or beer, then they will be classified to either item 2 or 3 of the Schedule to the Excise Tariff Act, as either spirits or other excisable beverages (OEBs). The main distinction between items 2 and 3 in the Schedule to the Excise Tariff Act is whether the alcohol content is above or below 10% alcohol by volume. If it is below 10%, then the product is classified to item 2 in the Schedule to the Excise Tariff Act. If it is above 10%, then the product is classified to item 3 in the Schedule to the Excise Tariff Act.

The discussion below explains in more detail about how to classify excisable alcohol products to these items, particularly item 3 in the Schedule to the Excise Tariff Act which has different rates of duty depending on the nature and intended use of the product.

12.3 POLICY AND PRACTICE

12.3.1 HOW ARE SPIRITS AND OTHER EXCISABLE BEVERAGES CLASSIFIED?

The following is an extract from the Schedule to the Excise Tariff Act which is relevant to spirits and other excisable beverages:

Tariff Item

Subitem

Description of Goods

Rate

2

 

Other excisable beverages not exceeding 10% by volume of alcohol

$85.87* per litre of alcohol

3

 

Spirits; Other excisable beverages exceeding 10% by volume of alcohol

See rates in Item 3, below

*Rate of duty as at 5 August 2019. You can find the current rates of duty on our website.

Other excisable beverages (OEBs) are beverages containing more than 1.15% alcohol by volume but exclude:

OEBs are classified to items 2 or 3 in the Schedule to the Excise Tariff Act depending on their strength.

Spirits are classified to item 3 in the Schedule to the Excise Tariff Act.[319]

Item 2 - Other excisable beverages not exceeding 10% by volume of alcohol

Item 2 in the Schedule to the Excise Tariff Act generally includes:

  • pre-mixed spirit based drinks, and
  • fermented products that are not beer or wine.

For an alcoholic beverage to be classified to item 2 in the Schedule to the Excise Tariff Act, the answer to all of the following questions must be NO:

  • Is the beverage under 1.15% alcohol by volume?
  • Is the beverage over 10% alcohol by volume?
  • Is the beverage wine?
  • Is the beverage brandy?
  • Is the beverage beer?

For more information about wine refer to Chapter 14 - Wine.

What happens to a beverage after it is delivered into the Australian domestic market is not relevant in determining if the product is classified to item 2 in the Schedule to the Excise Tariff Act. The beverage must be classified according to the state it is in at the time it is delivered into the Australian domestic market.

Example 12A

Beverage2Go manufactures a beverage that is 30% alcohol by volume. The beverage is delivered into the Australian domestic market in bottles that have instructions for mixing the beverage with other ingredients to make a particular style cocktail. The cocktail will have an alcoholic strength of 8% by volume. The beverage is not classified to item 2 in the Schedule to the Excise Tariff Act.

Item 3 - Spirits; Other excisable beverages exceeding 10% by volume of alcohol

Item 3 in the Schedule to the Excise Tariff Act contains a number of different subitems (ie categories) of excisable alcohol products that attract different rates of duty depending on the nature of the product and its intended use.

Tariff Item

Subitem

Description of Goods

Rate

3

 

Spirits; Other excisable beverages exceeding 10% by volume of alcohol

 

 

3.1

Brandy

$80.20* per litre of alcohol

 

3.2

Other excisable beverages exceeding 10% by volume of alcohol

$85.87* per litre of alcohol

 

3.5

Spirit that:

  1. a person has an approval, under section 77FD of the Excise Act 1901 , to use for fortifying Australian wine or Australian grape must; and
  2. is otherwise covered by the approval

Free

 

3.6

Spirit that:

  1. is for use by a person who is included in a class of persons determined under section 77FE of the Excise Act 1901 ; and
  2. if a quantity is specified in a determination under that section in relation to the person - does not exceed that quantity; and
  3. is for an industrial, manufacturing, scientific, medical, veterinary or educational purpose

Free

 

3.7

Spirit that:

  1. a person has an approval, under section 77FF of the Excise Act 1901 , to use for an industrial, manufacturing, scientific, medical, veterinary or educational purpose; and
  2. is otherwise covered by the approval

Free

 

3.8

Spirit denatured according to a formula determined under section 77FG of the Excise Act 1901 , other than spirit for use as fuel in an internal combustion engine

Free

 

3.10

Spirits not elsewhere included

$85.87* per litre

*Rate of duty as at 5 August 2019. You can find the current rates of duty on our website.

These subitems fall into two distinct groups of alcohol products:

1) Other excisable beverages exceeding 10% by volume of alcohol (item 3.2)

This classification covers:

  • all beverage spirits except brandy (for example, whisky, rum, vodka, gin, ouzo, tequila, schnapps, etc.), and
  • other alcoholic beverages that are not beer or wine and exceed 10% strength. For example wine fortified above 22% strength is not wine as defined in the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) legislation and is therefore an OEB exceeding 10% strength.

2) Spirits

The term 'spirits' refers to:

  • brandy, being a spirit distilled from grape wine in such a manner that the spirit possesses the taste, aroma and other characteristics generally attributed to brandy.[320] - subitem 3.1 in the Schedule to the Excise Tariff Act
  • concessional spirit[321] (spirit with a free rate of duty when delivered into the Australian domestic market, if the conditions for the particular concessional subitem are met) - subitems 3.5 to 3.8 in the Schedule to the Excise Tariff Act, and
  • spirits not elsewhere included in the Schedule to the Excise Tariff Act - subitem 3.10 in the Schedule to the Excise Tariff Act.

For more information about concessional spirit refer to Chapter 13 - Concessional spirit.

Spirits not elsewhere included may include:

  • denatured spirit that does not meet the requirements for subitem 3.8 in the Schedule to the Excise Tariff Act, and
  • concentrated wine flavours delivered for a use other than a concessional use.

The Excise Act prohibits the delivery of spirit or OEBs (other than concessional spirits) into the Australian domestic market in a container of greater than two litres capacity without our written permission.[322]

12.3.2 CONTENTS FOR DUTY PURPOSES

Excise duty is levied on litres of alcohol (Lals) at the rate specified in the relevant item of the Schedule to the Excise Tariff Act.

Determination of volume

The requirements for measuring the volume of containers of excisable alcoholic beverages are detailed in Excise (Volume - excisable goods) Determination 2019. Please refer to section 6.3.6 for further information in relation to volume measurement requirements.

Determination of strength

The requirements for measuring the alcoholic strength of excisable alcoholic beverages are detailed in Excise (Alcoholic strength of excisable goods) Determination 2019. Please refer to section 6.3.6 for further information in relation to strength measurement requirements.

Strength and tariff classification for other excisable beverages

As noted at the beginning of this chapter, there are separate tariff classifications for OEBs, depending on whether the content exceeds 10% by volume of alcohol.

A product labelled at 10% strength is classified to item 2 'Other excisable beverages not exceeding 10% by volume of alcohol' in the Schedule to the Excise Tariff Act. However, if the actual strength of the contents exceeds the permitted variation of 0.2%, the product must be classified to subitem 3.2 'Other excisable beverages exceeding 10% by volume of alcohol' in the Schedule to the Excise Tariff Act and the higher rate of duty applies.

Example 12B

Zed and cola in cans has a labelled strength of 10% but an actual strength of 10.2% alcohol by volume.

As the product does not exceed the permitted variation of 0.2%, the strength of the product for excise purposes is the labelled strength.

As the strength does not exceed 10%, the product is classified to item 2 in the Schedule to the Excise Tariff Act.

Example 12C

Why and dry in cans has a labelled strength of 10% but an actual strength of 10.3% alcohol by volume.

As the product exceeds the permitted variation of 0.2%, the strength of the product for excise purposes is the actual strength.

As the strength exceeds 10%, the product is classified to subitem 3.2 in the Schedule to the Excise Tariff Act.

Example 12D

Oops, lime and soda in cans has a labelled strength of 10.1% but an actual strength of 9.9% alcohol by volume.

As the product does not exceed the labelled strength, the strength of the product for excise purposes is the labelled strength.

As the strength exceeds 10%, the product is classified to subitem 3.2 in the Schedule to the Excise Tariff Act.

12.3.3 SPECIAL PROVISIONS FOR BEVERAGE SPIRITS - BRANDY, WHISKY & RUM

What is brandy, whisky or rum?

These spirits are defined in section 77FI of the Excise Act:

  • Brandy means a spirit distilled from grape wine in such a manner that the spirit possesses the taste, aroma and other characteristics generally attributed to brandy.
  • Whisky means a spirit obtained by the distillation of a fermented liquor of a mash of cereal grain in such a manner that the spirit possesses the taste, aroma and other characteristics generally attributed to whisky.
  • Rum means a spirit obtained by the distillation of a fermented liquor derived from the products of sugar cane, being distillation carried out in such a manner that the spirit possesses the taste, aroma and other characteristics generally attributed to rum.

What products can be classified as brandy, whisky and rum will be determined taking into account the definitions above and the following considerations:

  • the particular prerequisite raw materials from which the spirits are distilled
  • the manner in which the spirits are distilled, so that they possess certain characteristics generally attributed to the particular spirit (recognising that taste, aroma and characteristics can vary, even within a particular spirit type, for example light rum and dark rum)
  • the addition of other ingredients to the spirit post distillation and whether the end product still has the taste, aroma and characteristics generally attributed to the particular spirit, and
  • whether the spirits have been matured in wood by storage in wood for at least 2 years.

When spirit comes off the still, it will generally be colourless, characterless and of relatively high strength. Whether spirit possesses the taste, aroma and other characteristics generally attributed to brandy, whisky, or rum is a matter of fact taking into account the above considerations.

One of the characteristics attributable to specific spirits is the strength of the spirit as distilled. In line with industry practice we would not question the strength as a characteristic for brandy and whisky distilled up to a maximum of 95% alcohol by volume and for rum distilled up to a maximum of 96.5% alcohol by volume.

These characteristics are those that the spirit possesses when it comes off the still.

The following special provisions apply to brandy, whisky and rum.

Maturation requirement

You cannot deliver brandy, whisky or rum from our control unless they have been matured by storage in wood for at least two years.[323]

'Storage in wood' means that the part of the storage vessel - vats, casks or barrels - that is in contact with the spirit is made entirely of wood.

You must record the date on which the spirit is put into wood. If the spirit is temporarily held in non-wooden vessels, you cannot include that period for the purposes of maturation in wood. If you do not maintain accurate records you may not be able to calculate the date when the spirit reaches the required maturation age.

When blended, the maturation age of the spirits is taken to be that of the youngest constituent of the blend.

For information on the maturation requirements for imported spirits contact the Department of Home Affairs.

You can deliver spirit that has not been stored in wood for at least two years, but it cannot be delivered as a product described as brandy, whisky or rum.

Describing spirits as 'old' or 'very old'

Unless spirits have been aged in wood for five or 10 years, respectively, you cannot describe the spirits as 'old' or 'very old' or in a way that could reasonably lead another person to believe that the spirits have been matured for that period.[324]

12.3.4 WHAT ARE MY RESPONSIBILITIES AS A MANUFACTURER?

If you are licensed to manufacture excisable alcohol products, you are responsible for the safe custody of all alcohol under your control.[325]

You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable alcohol products.[326]

Where, after we take stock of excisable alcohol products manufactured, and the materials you use in the manufacturing process, it appears to us that not all the duty that should have been paid has been paid we can demand that you pay the amount that should have been paid.[327]

If you hold a manufacturer licence, you do not need a separate storage licence to store excisable alcohol products that you manufactured at those premises. You may also store excisable alcohol products that have been manufactured elsewhere by another entity and moved underbond into your licensed premises.

You are also responsible for ensuring that you comply with all conditions of your licence.[328]

For information about storage licences and conditions of licences refer to Chapter 2 - Licensing: Applications.

You must also:

  • ensure excisable alcohol products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[329]
  • pay the correct amount of excise duty [330]
  • get permission to move underbond excisable alcohol products[331]
  • ensure that your manufacture complies with the Excise Act and any conditions specified in your licence[332] not manufacture excisable alcohol products at premises that are not specified in your licence[333]
  • give us access to your factory when requested[334]
  • keep your excisable alcohol products safe and accounted for to our satisfaction[335]
  • provide all reasonable facilities to enable us to exercise our powers under the Excise Act[336]
  • provide sufficient lighting, correct weights and scales, and all labour necessary for
    • weighing material received into your factory
    • weighing all excisable alcohol products manufactured in your factory, and
    • taking stock of all material and excisable alcohol products contained in your factory.[337]

For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty.

For more information about obtaining permission to move underbond alcohol products refer to Chapter 5 - Movement permissions.

12.3.5 WHAT RECORDS DO I HAVE TO KEEP?

You must keep records, as directed by us and retain those records for the period directed. Your records must be available for us to inspect when requested. [338]

The information you may be requested to record includes:

  • the amount of excisable alcohol products produced showing all inputs, outputs and waste
  • details of all excisable alcohol products held in your licensed premises
  • all deliveries from your licensed premises
  • details of all duty payments and excise returns, and
  • any refunds and remissions.

It is good business practice to keep suitable and adequate records and these records are those that you would normally keep for your particular operations.

For more information on record keeping refer to Chapter 11 - Distillation.

12.3.6 WHAT ELSE CAN WE DO?

Access

We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises. [339] Note: we will usually only seek to enter your premises during normal business hours.

Stop vehicles

We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable alcohol products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle is unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[340]

Search vehicles

We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable alcohol products and that the vehicle has been used, is being used or will be used in the commission of an offence against the Excise Act (and certain offences in the Crimes Act 1914[341] and Criminal Code[342] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[343]

Examine goods

We can open packages and examine, weigh, mark and seal any excisable goods that are subject to excise control and lock up, seal, mark or fasten any plant in or on your factory.[344]

We can also:

  • supervise the manufacture of excisable alcohol products[345]
  • take samples of materials, partly manufactured excisable alcohol products and excisable alcohol products subject to excise control, and alcohol products that we have reasonable grounds for suspecting are excisable alcohol products on which duty has not been paid.[346]

12.4 PROCEDURES

12.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on spirits and other excisable beverages contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

12.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SPIRITS AND OTHER EXCISABLE BEVERAGES?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[347]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[348]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[349]

Move, alter or interfere

If you move underbond excisable alcohol products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[350]

Note:

This includes moving underbond excisable alcohol products from your premises to any other location or for export.

If your movement of underbond excisable alcohol products does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[351]

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[352]

Deliver

If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[353]

Sell

If you sell excisable alcohol products on which duty has not been paid (unless it is an underbond sale), the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[354]

Records

If you do not keep, retain and produce records in accordance with section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[355]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[356]

If you describe spirits as 'old' or 'very old' or in a way that could reasonably lead another person to believe that the spirits have been matured in wood for 5 or 10 years, respectively, and they have not, the maximum penalty is 10 penalty units.[357]

Evade

If you evade the payment of any duty that is payable, the maximum penalty is five times the amount of duty evaded or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[358]

Facilities etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[359]

If you do not provide sufficient lighting, correct weights and scales, and all labour necessary for weighing material received into, and all excisable alcohol products manufactured in, your factory and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[360]

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[361]

12.6 TERMS USED

Deliver into the Australian domestic market

[362]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[363]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[364] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. The written instructions are incorporated into the licence conditions.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

12.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

12.7.1 Excise Act 1901

Section 4 - Definitions

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 39D - Conditions of licence

Section 46 - Supervision by officers

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 53 - Responsibility of manufacturers

Section 54 - Liability to pay duty

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 62 - Deficiency in duty

Section 77FF - Spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose - specific approvals

Section 77FI - Delivery from CEO's control of brandy, whisky or rum

Section 77FL - Offence in relation to describing spirits as "old" or "very old"

Section 86 - Officers to have access to factories and approved places

Section 87 - Power to stop conveyances about to leave an excise place

Section 87AA - Searches of conveyances without warrant

Section 91 - Examine all goods

Section 92 - Seals etc. not to be broken

Section 106 - Samples

Section 117A - Unlawfully moving excisable goods

Section 117B - Unlawfully selling excisable goods

Section 120 - Offences

12.7.2 Excise Tariff Act 1921

The Schedule

12.7.3 A New Tax System (Wine Equalisation Tax) Act 1999

Subdivision 31-A Wine

12.7.4 Crimes Act 1914

Section 4AA - Penalty units

Section 6 - Accessory after the fact

12.7.5 Criminal Code Act 1995

Section 11.1 - Attempt

Section 11.2 - Complicity and common purpose

Section 11.5 - Conspiracy

13 CONCESSIONAL SPIRIT

13.1 PURPOSE

13.2 INTRODUCTION

13.2.1 WHAT IS CONCESSIONAL SPIRIT?

13.3 POLICY AND PRACTICE

13.3.1 HOW IS CONCESSIONAL SPIRIT CLASSIFIED?

13.3.2 CONCESSIONAL SPIRIT DISTRIBUTION NETWORK

13.4.1 SPIRIT USED IN FORTIFYING AUSTRALIAN WINE OR GRAPE MUST

13.4.2 SPIRIT USED FOR INDUSTRIAL, MANUFACTURING, SCIENTIFIC, MEDICAL, VETERINARY OR EDUCATIONAL PURPOSES

13.4.3 SPIRIT DENATURED TO A FORMULA DETERMINED BY THE COMMISSIONER

13.4.5 RECYCLING / REDISTILLATION OF CONCESSIONAL SPIRIT

13.4.6 TOLERANCES ON QUANTITIES DELIVERED / RECEIVED

13.5 PROCEDURES

13.5.1 HOW DO I APPLY FOR A PERMIT?

13.5.2 HOW DO I APPLY TO AMEND OR RENEW A PERMIT?

13.5.3 HOW DO I APPLY FOR A DENATURING FORMULA TO BE APPROVED?

13.5.4 WHAT DO I DO IF I NEED MORE INFORMATION?

13.6 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO CONCESSIONAL SPIRIT?

13.7 TERMS USED

13.8 LEGISLATION (quick reference guide)

13.1 PURPOSE

This chapter deals with how excise law applies to concessional spirit and discusses:

  • what is concessional spirit
  • what is undenatured spirit
  • what is denatured spirit
  • the concessional spirit distribution network
  • requirements for concessional spirit manufacturers
  • requirements for concessional spirit suppliers
  • requirements for concessional spirit end users
  • how concessional spirit is classified
  • spirit used in fortifying Australian wine or grape must
  • spirit used for industrial, manufacturing, scientific, medical, veterinary or educational purposes
  • spirit denatured to a formula approved by the Commissioner
  • recycling / redistillation of concessional spirit
  • tolerances on quantities delivered / received
  • how to apply for a permit
  • how to amend or renew a permit, and
  • how to apply for a denaturing formula to be approved.

13.2 INTRODUCTION

13.2.1 WHAT IS CONCESSIONAL SPIRIT?

Concessional spirit is spirit that may be delivered into the Australian domestic market at a free rate of duty when:

  • used for specific purposes, i.e. spirit used:
    • in fortifying Australian wine or Australian grape must
    • for an industrial, manufacturing, scientific, medical, veterinary or educational purpose, or
  • denatured in accordance with a formula determined by the Commissioner.

Use in the manufacture of excisable beverages or fuel is not a use that qualifies for a free rate of duty.

Concessional spirit is generally very high strength spirit. It is usually supplied at a strength of approximately 96% alcohol by volume. It may be distilled from various feedstock. Spirit distilled from different raw materials will retain some of its own specific characteristics, but will generally be of a neutral nature due to the high strength at which it is distilled.

What is undenatured spirit?

Undenatured spirit is drinkable and may be supplied for approved purposes, for example, for the manufacture of foodstuffs, internal medicines, vaccines etc.

For more information about using undenatured spirit refer to Section 13.4.3 - Spirit denatured to a formula determined by the Commissioner.

What is denatured spirit?

Denatured spirit is spirit processed by adding approved substances (denaturant) to make it unfit for human consumption.

For more information about using denatured spirit refer to Section 13.4.3 - Spirit denatured to a formula determined by the Commissioner.

13.3 POLICY AND PRACTICE

13.3.1 HOW IS CONCESSIONAL SPIRIT CLASSIFIED?

The following table lists the subitems in the Schedule to the Excise Tariff Act under which concessional spirit is classified. If you are a manufacturer or concessional spirit supplier, you will need to know this in order to complete your excise return.

Subitem

Description of goods

3.5

spirit for fortifying Australian wine or Australian grape must

3.6

spirit for use by a class of persons determined by the Commissioner for industrial, manufacturing, scientific, medical, veterinary or educational purposes

3.7

spirit that a person has specific approval from the Commissioner to use for an industrial, manufacturing, scientific, medical, veterinary or educational purpose.

3.8

spirit denatured in accordance with a formula approved by the Commissioner

You can get a copy of the latest version of the Schedule to the Excise Tariff Act by visiting our website at www.ato.gov.au

Essentially this means:

  • Subitem 3.5 - allows for the fortification of Australian wine or grape must provided the purchaser/user holds a concessional spirit permit
  • Subitem 3.6 - Members of the class of persons specified (Health care practitioners, veterinary practitioners, medical institutions, government institutions, educational institutions) may take delivery of a volume of spirit necessary to meet their industrial, manufacturing, scientific, medical, veterinary or educational needs without holding a concessional spirit permit.
  • Subitem 3.7 - allows for the sale of spirit for other specified purposes but requires the purchaser to hold a concessional spirit permit.
  • Subitem 3.8 - allows for the sale of denatured spirit to be sold without the need for the purchaser to hold a concessional spirit permit provided it is denatured to an approved formula.

13.3.2 CONCESSIONAL SPIRIT DISTRIBUTION NETWORK

What is the concessional spirit distribution network?

This network is made up of:

  • spirit manufacturers
  • licensed suppliers, and
  • end users holding an appropriate excise permit.

What licences do I need to have?

The following examples indicate the type of excise licences that may be required:

Activity

Licence

Manufacture spirit

manufacturer

Reduce the strength of spirit

manufacturer

Add colourings or other chemicals, including denaturants

manufacturer

Distribute spirit to end users

manufacturer or storage

Repackage spirit

storage

Export spirit

storage

User of spirits

None, unless spirit is used in the manufacture of another excisable product

What are the requirements if I am a concessional spirit manufacturer?

An excise manufacturer licence allows you to:

  • manufacture concessional spirit
  • store concessional spirit, and
  • sell concessional spirit.

You can use imported spirit in the manufacture of concessional spirit,[365] subject to the following conditions:

  • you must hold a customs warehouse licence issued under the Customs Act and an excise manufacturer licence issued under the Excise Act
  • the imported spirit must undergo a process of manufacture in Australia,[366] and
  • the spirit manufactured must be for use for a purpose listed in 13.3.1.

You must keep records, as directed, for the period directed and make them available to us on request.

You must:

  • lodge an excise return to enter concessional spirit delivered into the Australian domestic market, or
  • hold an underbond movement permission to deliver the spirit to another licensed premises or specified place.

In the case of imported spirit, you must hold a customs warehouse license to store the imported goods underbond in premises licensed under section 79 of the Customs Act, until such time as the imported spirit undergoes a process of manufacture in Australia at which time the resulting excisable product is subject to excise control.

For more information about:

What are the requirements if I am a concessional spirit supplier?

Concessional spirit suppliers distribute concessional spirit to end users, particularly by repackaging bulk spirit into smaller retail packs to suit client needs.

You need to be licensed as the resale of concessional spirit is not an approved purpose under the concessional spirit scheme. You may be licensed as a manufacturer or storage premises depending on the activities you undertake.

Before supplying spirit, you must establish the bona fides of each end user of concessional spirit where the spirit is classified to subitems 3.5, 3.6 or 3.7 in the Schedule to the Excise Tariff Act.

The following documentation is considered sufficient:

  • a current concessional spirits permit - for a concessional spirits permit holder (subitems 3.5 and 3.7 in the Schedule to the Excise Tariff Act) copy of fax allowed
  • registration certificate or registration number as a practitioner, or Therapeutic Goods Act 1989 (TGA) exemption certificate, for a purchaser in the following exempt classes*:
    • medical practitioners (pharmacists, doctors, chiropractors, dentists, osteopaths, physiotherapists, registered nurses) or other health care practitioners registered under State or Territory law
    • acupuncturists, herbalists, homeopaths and naturopaths that are registered under the National Health Act 1953 or hold a TGA exemption certificate, and
    • veterinary practitioners registered under State or Territory law
  • official letterhead or purchase order for the following exempt classes*:
    • medical institutions
    • educational institutions and
    • government agencies.

Medical, educational and government institutions are defined in the relevant legislative determinations.[367]

*For subitem 3.6 in the Schedule to the Excise Tariff Act

You must keep records, as directed, for the period directed and make them available to us on request.[368]

The records for concessional spirit suppliers would be details of:

  • quantity and alcoholic strength of all spirits received and/or produced
  • your individual sales or distribution records showing, where applicable, the
    • name and address of your customer
    • evidence that your customer is in an approved class of professional people or institution or is a permit holder
    • cumulative sales you have made to customers subject to annual limits
    • quantity and alcoholic strength of spirits you have sold or distributed, and
    • levels and alcoholic strength of your stock on hand,
  • details of all spirit from the time of receipt, through break bulk to final repackaging (for suppliers who repack spirit received in bulk containers), and
  • details of all losses or gains relating to repacking operations plus the final number and size of the repackaged product.

We recommend you conduct monthly stocktakes and maintain a running balance of spirits on hand.

You must:

  • lodge an excise return to enter concessional spirit delivered into the Australian domestic market, or
  • hold an underbond movement permission to deliver the spirit to another licensed premises or specified place.

For more information about:

Resellers who act as agents or brokers will not need a manufacturer or storage licence as long as they do not physically take possession of spirit. However, they require a periodic settlement permission that allows the delivery of the concessional spirit from licensed premises to an approved end user.

What are the requirements if I am a concessional spirit end user?

To be eligible to receive concessional spirit (other than denatured spirit) as an end user, you must:

  • hold a current permit,[369] or
  • be included in an eligible class of persons determined by the Commissioner.

You must keep your records of receipts and usage, and make them available to us on request.

Permits are valid for a period of one year from the date of initial issue. On renewal, permits may be valid for up to five years from the date on which they are renewed. The permit shows the maximum quantity of spirit that may be delivered each year.

There is no charge for a concessional spirits permit.

We have the right to require a security[370] or request a fresh security when we consider it to be necessary to protect the revenue or ensure compliance with your excise obligations.[371] Securities cannot be requested for denatured spirit that you have received that has been classified to subitem 3.8 in the Schedule to the Excise Tariff Act.

If we require a security, we calculate the amount on the estimated average monthly excise that would apply to the goods if excise duty was payable. We use the rate at subitem 3.10 in the Schedule to the Excise Tariff Act.

If you are a permit holder, you should carry out regular stock takes and keep a record of stock on hand. You are not required to maintain any prescribed recording system, however, you should keep records sufficient to satisfactorily account for your use of the spirit in accordance with an approved purpose.[372]

You are also responsible for the control and safe keeping of concessional spirit once the spirit has been received into your stock. We don't normally insist on any particular security arrangements other than normal good commercial practice. However, concessional spirits should be stored securely.

What are the requirements if I am a concessional spirit supplier and a concessional spirit end user?

You must comply with the requirements mentioned above for a concessional spirit supplier and a concessional spirit end user. You must include all quantities of spirit, delivered from your underbond stock for your concessional spirit approved purposes, on your excise returns.

13.4 CONCESSIONAL SPIRIT USE

13.4.1 SPIRIT USED IN FORTIFYING AUSTRALIAN WINE OR GRAPE MUST

What is wine fortification?

Wine fortification means increasing the level of alcohol by adding spirit to:

  • wine during or after fermentation, or
  • grape must during or after fermentation.

Fortification is also taken to include circumstances where brandy is mixed with sugar and used to sweeten sparkling wine (commonly known as expedition liqueur).

If you use spirit to fortify Australian wine or Australian grape must you must have a concessional spirit permit.

Do I need ATO approval to fortify?

You must obtain our permission to use spirit that you have produced (to produce spirit you require an excise manufacturer licence), or intend to purchase free of duty for use in fortifying Australian wine or Australian grape must. If we grant approval we will issue to you a concessional spirit permit.

What records do I need to keep?

You should keep the following records and make them available to us when requested:[373]

  • all documents:
    • recording any receipt of fortifying spirit
    • relating to storage of fortifying spirit, or
    • relating to use of fortifying spirit
    • supplier delivery documents (consignment note, delivery docket and so on), and
    • working documents, such as operations and cellar notes.

An audit trail that traces the fortifying spirit as it moves in and out of bulk vessels allows you to account for the excisable goods to our satisfaction. Bulk vessels include vats, intermediate bulk containers (IBC) and drums.

The transactions under this heading include:

  • Receipt of fortifying spirit
  • Movements between vessels
  • Movements out to fortification

For each vessel, we recommend

  • Product identification details, e.g. type
  • Date, quantity in (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Date, quantity out (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Fortification number
  • Running balance
  • Losses and gains

Your records need to include the following details for each fortification:

  • date and fortification identification number
  • details of the wine or grape must, including:
    • litres of wine / kilograms of grape must
    • Baumé (sugar content) of unfermented juice
    • Baumé of fermented wine, and
    • alcoholic strength of wine
  • details of spirits used including
    • litres used
    • alcoholic strength
    • litres of alcohol (Lals) used
  • details of fortified wine, including
    • litres of fortified wine produced
    • alcoholic strength of fortified wine, and
    • Baumé content of fortified wine.

You do not need to create additional records, as the necessary details should be part of your normal commercial documentation.

How do I account for my use?

You may be asked to account to us for the use of fortifying spirit accessed free of duty under subitem 3.5 of the Schedule to the Excise Tariff Act.[374] You should be able to do so if you have accurately retained the records described above.

If you cannot account satisfactorily for the use of spirit, we can demand payment of an amount equal to the excise you would have been liable to pay if the spirits had not been given concessional (excise-free) treatment. This applies, regardless of whether you have a concessional spirits permit or an excise licence.

You should phone us on 1300 137 290 to advise of any:

  • significant spillage
  • theft of spirits from your premises or in transit from your supplier
  • excessive losses.

For information on taxes that may apply to fortified wine refer to Chapter 14 - Wine.

13.4.2 SPIRIT USED FOR INDUSTRIAL, MANUFACTURING, SCIENTIFIC, MEDICAL, VETERINARY OR EDUCATIONAL PURPOSES

Approval can be granted for a wide variety of industrial, manufacturing, scientific, medical, veterinary or educational purposes. These include the following:

  • fortification of imported wines
  • manufacture of
    • medicines
    • vaccines
    • printing inks
    • foodstuffs
  • sterilisation of equipment, and
  • preservation of specimens.

The resale of spirits and the manufacture of excisable beverages or fuel, using spirits, are not approved purposes.

Please refer to Appendix A at the end of this Chapter for a list of activities that have previously been approved.

How is this spirit classified?

Spirit used for these purposes is classified to one of the following sub-items in the Schedule to the Excise Tariff Act:

Subitem

Description of goods

3.6

spirit for use by a 'class of persons' determined by the Commissioner within quantity limits for industrial, manufacturing, scientific, medical, veterinary or educational purposes

3.7

spirit that a person has specific approval from the Commissioner to use for an industrial, manufacturing, scientific, medical, veterinary or educational purpose.

Who can receive spirit without a permit?

The Excise (Concessional spirits - class of persons) Determination 2014 (No.1) provides for following 'class of persons':

  •  Health care practitioners
  •  Veterinary practitioners
  •  Medical institutions
  •  Government institutions
  •  Educational institutions

Members of the class of persons specified may take delivery of a volume of spirit necessary to meet their industrial, manufacturing, scientific, medical, veterinary or educational needs without applying for a permit.

(Note: in the case of institutions it refers to the institution as a whole).

Health care practitioner is given a very broad definition under the determination[383] and means:

  • a doctor, dentist, pharmacist, registered nurse or other health care practitioner registered under the law of a State or Territory; or
  • an acupuncturist, herbalist, homeopath or naturopath certified as exempt from the operation of Part 3-3 of the Therapeutic Goods Act 1989.

We can issue a determination which will specify the particular class or category and may set a limit on the volume of concessional spirit purchased without a permit. If you receive spirit under this arrangement, you may only use the spirit for industrial, manufacturing, scientific, medical, veterinary or educational purposes.

The spirit supplied may be undenatured or denatured using a formula that is not on our approved list.[375] To receive this type of concessional spirit you must self-assess:

  • whether you are entitled to receive spirit under any of the determinations, and
  • that you can comply with the terms of the determination.

You must also provide identification to the supplier to show you are eligible under a determination.

Your supplier:

  • needs to be satisfied you fit into a class of persons identified in the determinations, and
  • will retain appropriate evidence of this, such as Therapeutic Goods Administration (TGA) approvals or Australian Medical Association registration.

For information on the Excise (Class of person) determination, go to our website at www.ato.gov.au/excise and follow the links to 'concessional spirits'.

Who needs a permit?

You will need to apply for a permit to access concessional spirit if you are not covered by the determination.

Spirit received with a permit generally does not have any denaturant added to it unless you specifically request it or we impose it as a condition of the permit.

We have published guidelines that must be taken into account when deciding whether to give an approval.[376]

We may give approval, subject to conditions[377] including limits on quantity, for use of concessional spirit for the manufacture of non-beverage products, such as:

  • foodstuffs
  • vinegar
  • essences and flavours
  • internal medicines, or
  • mouthwashes.

We do not give approval for concessional spirit to be used:

  • in the manufacture of excisable beverages or
  • as fuel in internal combustion engines.

For more information about the excise treatment of:

What additional requirements apply to essences?

If you are using spirit to manufacture an essence, you must be able to show that the essence:

  • is a concentrated flavour, and
  • is for culinary purposes, for example in baking or as an additive to chocolate, or
  • will be used in small proportions to flavour non-alcoholic or non-excisable alcoholic beverages, for example soft drinks, cordials etc, and
  • will not be used as a direct substitute for the original spirit.

Essences may also be used in the manufacture of products subject to the Wine Equalisation Tax (WET), provided the requirements of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) are met.

In considering an application for spirit for use in manufacturing an essence, we will look at whether the product is:

  • marketed in packaging that resembles packaging for an alcoholic beverage
  • packaged in six packs or similar multiple packaging types
  • required by state legislation to be sold through licensed liquor outlets or is subject to state liquor licensing laws
  • marketed with instructions about how it can be used as an alcoholic beverage
  • packaged for retail sale in sizes greater than 50ml (or 100 ml for vanilla essence), irrespective of who in the marketing chain does the packaging, or
  • sold in package sizes greater than 50ml, with no demonstrated culinary use.

What records do I need to keep?

If you receive concessional spirit classifiable to subitem 3.6 or subitem 3.7 in the Schedule to the Excise Tariff Act, you must keep sufficient records to account satisfactorily for your use.[378] You do not need to create additional records, as the necessary details should be part of your normal commercial documentation. If the spirit is used:

  • as an input into manufacture, your manufacturing records should be sufficient to track and quantify spirit usage.
  • as a consumable, your dispensing records should be sufficient to track and quantify spirit usage.

This would include:

  • all documents:
    • recording any receipt of concessional spirit
    • relating to storage of concessional spirit, or
    • relating to use of concessional spirit
  • supplier delivery documents (consignment note, delivery docket and so on), and
  • working documents, such as operations notes.

An audit trail that traces the concessional spirit as it moves in and out of bulk vessels, awaiting use for an approved purpose, allows you to account for the excisable goods to our satisfaction. Bulk vessels include vats, intermediate bulk containers (IBC) and drums.

The transactions under this heading include:

  • Receipt of fortifying spirit
  • Movements between vessels
  • Movements out to fortification

For each vessel, we recommend:

  • product identification details, e.g. type
  • date, quantity in (litres) and temperature, strength, litres of alcohol (litres × strength)
  • date, quantity out (litres) and temperature, strength, litres of alcohol (litres × strength)
  • approved purpose and any reference number eg stores requisition number
  • running balance
  • losses and gains

If you cannot satisfactorily account for use of the spirit we may issue a demand for payment. The demand would be for an amount equal to the duty that would have been payable on the spirit if:
  • there had been no approval or determination (as the case requires); and
  • the spirit had been entered for home consumption on the day on which we made the demand.

What special record keeping applies to pharmacists supplying ships?

If you are a pharmacist who supplies spirit to a ship as first aid supplies, we accept that you have satisfactorily accounted for your use of spirit, if:

  • you supply no more than 3 litres of undenatured ethanol to a particular ship per year
  • the ship's agent or ship's provedore supplies you with an order signed by the ship's captain and quoting Marine Orders, Part 10 (Order No. 13 of 2001)
  • the order documentation contains:
    • the name of the ship and Lloyds number
    • the voyage number and date, and
    • the captain's name
  • you record the details of the order in your register and provide the agent with a delivery advice
  • the agent signs for receipt of the spirit
  • the agent delivers the spirit to the captain on board the ship
  • the captain signs the delivery advice for receipt of the spirit
  • the agent returns the signed delivery advice to you, and
  • you retain the signed delivery advice.

13.4.3 SPIRIT DENATURED TO A FORMULA DETERMINED BY THE COMMISSIONER

Spirit is denatured so that it may be used for a specified purpose while reducing the risk that it will be used to manufacture excisable beverages or fuel.

An entity denaturing spirit needs to have a manufacturer licence.

How is spirit denatured to an approved formula classified?

Spirit denatured to an approved formula is classified to subitem 3.8 in the Schedule to the Excise Tariff Act. This spirit is no longer subject to excise control from the time it is delivered into the Australian domestic market, at a free rate of duty, by the supplier. No permit is required.

Denatured spirit must not be used in the manufacture of fuel without an appropriate excise manufacturer licence. Ethanol denatured for use as fuel for internal combustion engines is subject to excise duty and is classified to subitem 10.20 in the Schedule to the Excise Tariff Act.

For more information about fuel ethanol see Excise guidelines for the fuel industry available on our website at www.ato.gov.au

What does the Commissioner consider when approving denaturing formulas?

We take into account the following factors when deciding if spirit is sufficiently denatured:

Factors

Details

Degree of difficulty in removing the denaturant from spirit

Based on:

  • differentials in boiling points - less than 40ºC is an acceptable level of difficulty, or
  • other means, for example agitation

Effectiveness of the denaturant (at a minimum strength of 5%) as a deterrent from use as a beverage, when diluted with other beverages, such as water or soft drink

Due to:

  • unpleasant odour or taste
  • oily or viscous quality, signalling the presence of the denaturant, or
  • toxicity (this may not be a sufficient deterrent if the presence of the toxic substance is not indicated by other factors)

Factors such as price and marketing

The degree of risk is partially dependent on the price differential between spirit and fuel. The high cost of fuel is a driver for fuel substitution, increasing the risk of concessional spirit being diverted to fuel.

Whether a denaturant is itself a fuel, such as petrol, or an additive typically used in producing fuel ethanol, such as an emulsifier

Due to the risk of denatured spirit being diverted for use as fuel ethanol

What formulas are used to denature spirit?

The formulas determined by the Commissioner are contained in Excise (Denatured spirits) Determination 2016 (No. 3). An Explanatory Statement[379] contains details of the background, purpose and operation of the determination.

The formulas are based on a minimum percentage of an approved denaturing chemical added to spirit at an alcoholic strength of 100%. If the spirit is less than 100% ethanol, the minimum concentration is to be adjusted relative to the alcohol content.

EXAMPLE 13A

According to the formula, alcohol may be denatured by the addition of 1% by volume n-propanol.

Spirit consisting of 80% ethanol may be denatured according to the formula by the addition of 0.8% by volume n-propanol.

For more information about what constitutes excise manufacture see Chapter 2 - Licensing: Applications.

What records do I need to keep?

You should keep the following records and make them available to us when requested:

  • all documents:
    • recording any receipt or manufacture of spirit
    • relating to storage of spirit,
    • relating to use of spirit, or
    • relating to the denaturing of spirit
  • supplier delivery documents (consignment note, delivery docket and so on), and
  • working documents, such as operations notes.

Spirit denaturing operations - Raw materials

An audit trail commencing with raw material allows us to check stated production against known material usage.

For each denaturing substance, we recommend recording:

  • Date
  • Opening stock
  • Quantity received
  • Supplier name
  • Quantity used
  • Running balance

Denaturing record

Generally, the denaturing substance is added to the spirit within your bulk storage vessels. As such, you may simply include in your bulk storage register a record of:

  • Date
  • The quantity of spirit to be denatured (Litres, strength, Lals)
  • Description of the denaturing substance
  • The quantity of denaturing substance added
  • The resultant quantity of denatured spirit (Litres, strength, Lals)
  • Description of the denatured spirit, e.g. type
  • Losses and gains

Denaturer operations - Bulk storage

An audit trail that traces underbond excisable product as it moves in and out of bulk vessels allows you to account for the excisable goods to our satisfaction. Bulk vessels include vats, tanks, casks, IBC and drums. The transactions under this heading include:

  • Movements between vessels
  • Movements out to packaging
  • Movements returned from packaging, e.g. decants, drainings
  • Under bond movements in or out
  • Manufacture e.g. mixing with denaturants.

For each vessel, we recommend:

  • Product identification details, e.g. type
  • Date, quantity in (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Date, quantity out (litres) and temperature, strength, litres of alcohol (litres × strength)
  • Excise clearance type, e.g. excise return, remission, under bond removal, or to packaging
  • Running balance
  • Losses and gains

Periodic stocktakes are as much about your good governance as they are about an excise obligation. We recommend regular bulk vessel stocktakes to:

  • establish the accuracy of stock records
  • detect omissions or errors in stock records, and
  • identify security issues such as theft, plant and equipment problems.

We recommend that you perform a full survey (volume and strength) of any bulk vessels if there has been no activity within the last three months.

As part of the stock reconciliation process, stock records are adjusted to reflect the stocktake results. While bulk losses are not normally subject to call up of duty, you must keep adequate records to account for these losses.

Denaturer operations - Packaging

An audit trail that traces underbond excisable product from the bulk vessels through the packaging process and into packaged stock allows you to account for the excisable goods to our satisfaction.

For each packaging run, we recommend:

  • Date of packaging
  • Product identification details, e.g. ethanol with 5% methanol
  • Packaging unit size, e.g. 500ml bottle
  • Total quantity available for packaging (Lals)
  • Actual alcoholic strength
  • Total number of units packaged
  • Average fill per package
  • Product captured and returned to bulk storage, e.g. drainings, flushings (Lals)
  • Samples taken from the packaging line (Lals)

The calculation of packaging efficiency is as much about your good governance as it is about an excise obligation. The packaging efficiency calculation is:

Lals packaged × 100 = % efficiency

Net Lals available for packaging 1

Net Lals available for packaging is calculated as:

  • Total quantity available for packaging (Lals)
    • less Product captured and returned to bulk storage (Lals)
    • less Samples taken from the packaging line (Lals)

Lals packaged is calculated as:

  • Total number of units packaged × Packaging unit size × Label strength

Example 11X

A packaging run of ethanol with 5% methanol on 1 October 2012 recorded:

500ml bottles, 95.0% label strength

Actual alcoholic strength 95.0%

Total quantity available for packaging 2,000 Lals

Total number of units packaged 4,080 bottles

Average fill per package 501.0ml

Product captured and returned to bulk storage 13.7 litres at 95%a.v. = 13.0 Lals

Samples taken from the packaging line (Lals) 6 bottles = 2.8 Lals

Lals packaged = 4080 × 500ml × 95%a.v. = 1,938 Lals

Net Lals available for packaging = 2,000 less 13 less 2.8 = 1,984.2 Lals

Lals packaged × 100 = % efficiency

Net Lals available for packaging 1

1938.0 Lals × 100 = 97.7% efficiency

1984.2 Lals 1

If packaging efficiency falls below historical performance you should investigate.

Denaturer operations - Packaged storage

An audit trail that traces underbond excisable product as it moves in and out of your packaged storage area allows you to account for the excisable goods to our satisfaction.

For each product line, we recommend:

  • Product identification details, e.g. type
  • Packaging unit size, e.g. 500ml bottle
  • Label strength
  • Date, unit quantity in
  • Date, unit quantity out
  • Excise clearance type, e.g. excise return, remission, under bond removal
  • Running balance
  • Losses and gains

Periodic stocktakes are as much about your good governance as they are about an excise obligation. We recommend regular stocktakes to:

  • establish the accuracy of stock records
  • detect omissions or errors in stock records, and
  • identify security issues such as theft, plant and equipment problems.

As part of the stock reconciliation process, stock records are adjusted to reflect the stocktake results. In some circumstances stocktake gains may be offset against unaccounted shortages when calculating duty payable on packaged stock losses.

For more offsetting stock shortages against stock surpluses refer to 6.3.8

You do not need to create additional records, as the necessary details should be part of your normal commercial documentation.

13.4.5 RECYCLING / REDISTILLATION OF CONCESSIONAL SPIRIT

You must not remove all or part of a denaturing substance from spirit classified to subitem 3.8 of the Schedule to the Excise Tariff Act without our permission.[380]

We may give permission, for example, where denatured spirit is used and re-used as a solvent in an industrial or manufacturing process.

13.4.6 TOLERANCES ON QUANTITIES DELIVERED / RECEIVED

It may be inconvenient to apply for minor adjustments to the approved quantities shown on permits. To simplify your administration and reduce your compliance costs, we allow a tolerance on maximum quantities delivered.

All clients may receive a maximum of 105% of the quantity of spirit approved on their current permit without requiring an adjustment. For example a permit for 200 litres will allow the delivery of up to 210 litres without further approval.

The concessional spirit manufacturer or supplier must enter the full amount delivered on the delivery documents and maintain a cumulative total of the quantities delivered to the client. The manufacturer or supplier must ensure that the extended limit is not exceeded.

13.5 PROCEDURES

13.5.1 HOW DO I APPLY FOR A PERMIT?

To obtain a permit to receive concessional spirits, you must complete an Application/renewal for a permit to receive concessional spirits (NAT 3248).

We will consider your application and advise you of our decision within 28 days of receiving all necessary information. We may decline to issue you with a permit, for example if you are not using the spirit for an approved purpose as part of a business or you have a history of poor compliance with other laws we administer. We may also place a condition on your permit if we consider it necessary to do so.

To contact us phone 1300 137 290.

Our staff will:

  • discuss your particular circumstances with you
  • give you advice about the appropriate permit
  • explain how to apply
  • explain your ongoing obligations as a permit holder, and
  • provide you with a permit application form.

There is no charge for a permit to receive concessional spirit.

How do I lodge an application?

You need to complete the relevant form to apply for a permit to receive concessional spirit.

You can lodge your completed application form and supporting documents via:

the Business Portal

fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

You must not possess or have custody or control of concessional spirit before your permit has been granted.[381]

We will process your application within 28 days of the date we receive all required information.

13.5.2 HOW DO I APPLY TO AMEND OR RENEW A PERMIT?

You will need to apply to amend your permit if you:

  • want to increase the amount of spirit that you are allowed to receive
  • want to add to, or change details of, your nominated supplier(s)
  • change your end use, or
  • move premises.

You will be notified when your permit is about to expire and invited to renew it. Renewal of a permit is not automatic and you must apply to renew your permit before it expires.

You should apply to amend or renew current permits in writing by email or by telephoning us on 1300 137 290.

13.5.3 HOW DO I APPLY FOR A DENATURING FORMULA TO BE APPROVED?

Applications for approval of formulas (for the purposes of subitem 3.8 in the Schedule to the Excise Tariff Act) must be made in writing to us and contain the following information:

  • details of the formula
  • specifications for the denaturant(s) used, and
  • technical specifications for the effects of the denaturant in terms of smell, taste and toxicity in a quantity of alcohol at a strength of 5% by volume.

We will advise you of the outcome of your application in writing.

Approved formulas specify the minimum quantity of denaturant that must be used and are set out in Excise (Denatured spirits) Determination 2016 (No. 3) which can be accessed on our website at www.ato.gov.au/excise

13.5.4 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on concessional spirit contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

13.6 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO CONCESSIONAL SPIRIT?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[382]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[383]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[384]

If you abstract a denaturing substance from spirit that has been delivered into the Australian domestic market, without permission, the penalty is a maximum of 50 penalty units.[385]

Move, alter or interfere

If you move underbond excisable alcohol products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[386]

Note:

This includes moving underbond excisable alcohol products from your premises to any other location or for export.

If your movement of underbond excisable alcohol products does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[387]

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[388]

Deliver

If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and five times the amount of duty on the excisable alcohol products.[389]

Records

If you do not keep, retain and produce records in accordance with section 50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[390]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[391]

Evade

If you evade the payment of any duty that is payable, the maximum penalty is five times the amount of duty evaded or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[392]

Facilities etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[393]

If you do not provide sufficient lighting, correct weights and scales, and all labour necessary for weighing material received into and all excisable alcohol products manufactured in your factory, and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[394]

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[395]

13.7 TERMS USED

Deliver into the Australian domestic market

[396]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[397]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcohol products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act, or an Excise Tariff alteration, and manufactured in Australia.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[398] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

Refer to section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. The written instruction is incorporated into the licence conditions.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to the Commissioner's control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

13.8 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

13.8.1 Excise Act 1901

Section 16 - Right to require security

Section 20 - New sureties

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 58 - Entry for home consumption etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 77FD - Spirit for fortifying Australian wine or Australian grape must

Section 77FE - Spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose - class determinations

Section 77FF - Spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose - specific approvals

Section 77FH - When an amount is payable on spirit covered by section 77FD, 77FE or 77FF

Section 77FJ - Person must not abstract denaturing substances in spirit classified to subitem 3.8

Section 92 - Seals etc. not to be broken

Section 117 - Unlawful possession of excisable goods

Section 117A - Unlawfully moving excisable goods

Section 120 - Offences

13.8.2 Excise Tariff Act 1921

The Schedule

13.8.3 Crimes Act 1914

4AA - Penalty units

APPENDIX A

Non-exhaustive list of activities that have previously been approved for concessional spirit permits:

  • cake manufacture
  • cosmetics
  • essences
  • extraction of flavour
  • foodstuff manufacture
  • fortification of Australian wine or Australian grape must
  • mouth washes
  • perfumes
  • preservation of specimens
  • printing inks
  • refrigeration
  • sterilisation of factory equipment
  • tinctures
  • titration or lab work
  • vaccines

14 WINE

14.1 PURPOSE

14.2 INTRODUCTION

14.2.1 WHAT TAXES APPLY TO WINE, INCLUDING FORTIFIED WINE?

14.2.2 WHAT IS THE WINE EQUALISATION TAX?

14.3 POLICY AND PRACTICE

14.3.1 WHAT IS WINE?

14.3.2 ALCOHOLIC STRENGTHS FOR FORTIFIED WINE?

14.4 PROCEDURES

14.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

14.5 LEGISLATION (quick reference guide)

14.1 PURPOSE

This chapter deals with wine and the wine equalisation tax (WET).

14.2 INTRODUCTION

14.2.1 WHAT TAXES APPLY TO WINE, INCLUDING FORTIFIED WINE?

Two taxes may apply to wine, including fortified wines, provided they contain more than 1.15% by volume of ethyl alcohol:

  • the wine equalisation tax (WET), or
  • excise duty.

The following table sets out whether you need to pay excise duty or WET for fortified wine or grape must. (Note: Wine subject to WET can only be fortified with the types of spirit listed in the table.)

Product

WET

Excise duty

Grape wine fortified with grape spirit and/or brandy

Alcoholic strength:

 

 

  • 22% or less

Y

N

  • more than 22%

N

Y

Grape wine products fortified with grape spirit and containing at least 70% grape wine

Alcoholic strength:

 

 

  • less than 8%

N

Y

  • 8%-22% inclusive

Y

N

  • more than 22%

N

Y

Fruit or vegetable wine fortified with grape spirit or neutral spirit

 

 

Alcoholic strength:

 

 

  • less than 15%

N

Y

  • 15% - 22% inclusive

Y

N

  • more than 22%

N

Y

Cider and perry

Cannot be fortified

*

Mead fortified with grape spirit or neutral spirit

Alcoholic strength:

 

 

  • less than 15%

N

Y

  • 15% - 22% inclusive

Y

N

  • more than 22%

N

Y

Sake

Cannot be fortified

*

* Where these products are fortified they will be subject to excise duty.

If you need to pay excise duty refer to Chapter 12 - Spirits and other excisable beverages.

For information on record keeping requirements for fortified wines refer to Chapter 13 - Concessional spirit.

14.2.2 WHAT IS THE WINE EQUALISATION TAX?

The wine equalisation tax (WET) is a value based tax applied to dealings with wine. Dealings with wine include selling wine, using wine, or making a local entry of imported wine at the customs barrier.

There are some exemptions, including:

  • dealings that are GST-free supplies or non-taxable importations
  • exemptions based on quoting[399]
  • if the goods are covered by Schedule 4 of the Customs Tariff Act 1995
  • if the wine has been taxed while in bond, i.e. under the control of Customs, and
  • goods returned to Australia in an unaltered condition.[400]

The WET rate is 29% of the wholesale sale value.

Generally, WET is included in the price for which retailers (including bottle shops, hotels, restaurants and cafes) purchase the wine.

The ATO administers and collects WET on assessable dealings with wine in Australia. Payment is included at Label 1C of your Business Activity Statement (BAS). The Department of Home Affairs administers and collects WET on imports.

There is also a rebate scheme which provides a rebate of wine tax for eligible producers of wine. Producer rebates and other wine tax credits are claimed at Label 1D of your BAS.

If you are liable to wine tax on a dealing or are entitled to a wine tax credit, you are required to keep records of all transactions that relate to the dealing or credit claim for a period of five years after completion of the transactions or acts to which they relate. The records must be in English or readily accessible and convertible into English. Your wine tax liability must also be able to be readily determined from your records.[401]

Wine Equalisation Tax Ruling WETR 2009/1 [402] explains how the wine tax operates, which alcoholic products are covered by the WET and your record keeping responsibilities. Wine Equalisation Tax Ruling WETR 2009/2[403] explains the operation of the wine producer rebate for producers of wine that are registered for GST in Australia, and Wine Equalisation Tax Ruling WETR 2006/1[404] explains the operation of the producer rebate for producers of wine in New Zealand that have their wine exported to Australia.

For more information about WET, visit our website atwww.ato.gov.au

14.3 POLICY AND PRACTICE

14.3.1 WHAT IS WINE?

WET applies only to products that fall within the definition of 'wine'.[405]

Wine is defined as one of the following beverages, containing more than 1.15% alcohol by volume:

  • grape wine
  • grape wine products
  • fruit or vegetable wine
  • cider or perry
  • mead, and
  • sake.

Each of these products is defined in the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act). Some of them are further defined in the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).

The table below gives the definition of the products subject to WET:

Definitions

Examples

Grape wine[406] is a beverage that:

  • is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes, and
  • does not contain more than 22% alcohol by volume.

Grape wine continues to be grape wine even though grape spirit or brandy is added to it (within the strength limit of 22%).

Includes:

  • table wines (red, white and rosé)
  • sparkling wines
  • fortified wines, and
  • dessert wines

Grape wine products[407]

A grape wine product is a beverage that:

  • contains at least 70% grape wine;
  • has not had added to it any ethyl alcohol from any other source, except
  • grape spirit; or
  • alcohol used in preparing vegetable extracts (including spices, herbs and grasses) where the alcohol:
    • is only used to extract flavours from vegetable matter;
    • is essential to the extraction process; and
    • adds no more than one percentage point to the overall alcoholic strength by volume of the beverage;
  • has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial; and
  • contains between 8% and 22% (inclusive) of ethyl alcohol by volume.

Grape wine products are generally traditional products that have been produced by the wine industry for many years.

Grape wine products include:

  • vermouth;
  • marsala;
  • green ginger wine
  • wine based cocktails and creams that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial; and
  • imitation liqueurs (wine based) that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial;

but only where they satisfy the requirements in the column on the left.

Grape wine products do not include:

  • wine coolers (unless they satisfy the requirements in the column on the left);
  • ready to drink (RTD) or designer drinks that contain a wine base (unless they satisfy the requirements in the column on the left);
  • RTDs or designer drinks that contain spirits (other than grape spirit); RTDs or designer drinks containing grape spirit must also satisfy the requirements in the column on the left, and
  • Spirit based (other than grape spirit) cocktails, creams and liqueurs.

A fruit or vegetable wine[408] is a beverage that:

  • is the product of the complete or partial fermentation of the juice or must of fruit or vegetables, or products derived solely from fruit or vegetables
  • has no added alcohol from sources other than grape spirit or neutral spirit
  • has no added colour or flavour (apart from any coming from grape spirit or neutral spirit), and
  • contains:
  • between 8% and 22% (inclusive) alcohol by volume, or
  • if grape spirit or neutral spirit has been added, contains between 15% and 22% (inclusive) alcohol by volume.

Note 1: grape spirit or neutral spirit can only be added if the beverage meets the definition of fruit or vegetable wine before the spirit is added.

Note 2: The addition of sugar to fruit wine post fermentation does not constitute the addition of a flavour.[409] Notwithstanding this, sugar cannot be added to wine products in amounts relative to other fermentable material such that the sugar cannot be properly described as an 'additive'.

Includes:

  • table wine
  • sparkling wine
  • fortified wine

derived from fruit or vegetables.

Does not include:

  • ready-to-drink (RTD) or designer drinks that contain alcohol fermented from fruits, such as lemons and oranges

(unless the product satisfies the requirements in the first column).

Cider and Perry[410] are beverages that:

  • are the product of the complete or partial fermentation of the juice or must of apples or pears
  • have no added any ethyl alcohol from any other source; and
  • have no added liquor or substance (other than water or the juice or must of apples or pears) that gives colour or flavour.

Note 1: Adding cane sugar to apple or pear juice prior to the fermentation of that apple or pear juice will not prevent the resulting beverage product from being 'cider' as defined in section 31-5 of the WET Act provided that the amount of sugar added does not change the character of the beverage such that it can no longer be described as the product of apples or pears.[411]

Includes:

  • traditional cider and perry
  • draught cider and perry
  • dry cider and perry
  • sweet cider and perry

Do not include:

  • cider or perry that has had lemon, blackcurrant or other fruit flavourings added
  • cider or perry that has had cola or other flavourings added.

Mead[412] for WET purposes is a beverage that:

  • is the product of the complete or partial fermentation of honey;
  • has not had added any ethyl alcohol from any other source, except grape spirit or neutral spirit;
  • has not had added to it any liquor or substance that gives colour or flavour other than:
    • grape spirit or neutral spirit;
    • honey, herbs and spices, all of which can be added at any time;
    • caramel, provided it is added after the fermentation process is complete; or
    • fruit or product derived entirely from fruit, provided:
  • the fruit or product has not been fermented;
  • the fruit or product is added to the mead before fermentation of the mead; and
  • after the addition of the fruit or product and before fermentation the mead contains not less than 14% by volume of honey and not more than 30% by volume of the fruit or product;
  • if fruit or product is added the mead contains between 8% and 22% (inclusive) of ethyl alcohol by volume, and
  • if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume. However, grape spirit or neutral spirit can only be added if the beverage meets the definition of mead before the grape spirit or neutral spirit is added.

Note: If fruit or product derived from fruit is added and it contains concentrated fruit juice or fruit pulp, the proportion of fruit or product in the mead is worked out by assuming that it has been reconstituted according to the recommendations of the manufacturer of the concentrated fruit juice or pulp.

Mead includes:

  • honey mead;
  • fortified mead;
  • liqueur mead; and
  • spiced mead.

Sake[413] is a beverage that:

  • is the product of the complete or partial fermentation of rice
  • has no added alcohol, and
  • has no added colour or flavour.

Includes:

  • sake (produced by fermentation), and
  • rice wine

Does not include:

  • distilled sake.

14.3.2 ALCOHOLIC STRENGTHS FOR FORTIFIED WINE?

The Excise Act does not specify strength requirements for fortified wines. However, there are minimum strength requirements for grape wine products and fruit or vegetable wine under the WET Act. Also, the Australia New Zealand Food Standards Code states that fortified wine must contain at least 15% by volume of ethanol at 20°C.

The WET legislation[414] and the Australia New Zealand Food Standards[415] both require that fortified wine must contain not more than 22% by volume of ethyl alcohol at 20°C.

14.4 PROCEDURES

14.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on wine or the wine equalisation tax contact us via:

the Business Portal

phone on 1300 137 290
fax at 1300 130 916,
email at alcohol@ato.gov.au, or
mail to
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to electronic requests within 15 business days. We will ordinarily finalise private rulings within 28 days of receiving all necessary information. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

14.5 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

14.5.1 A New Tax System (Wine Equalisation Tax) Act 1999

Division 7 - Exemptions

Section 31-1 wine

Section 31-2 - Meaning of grape wine

Section 31-3 - Meaning of grape wine product

Section 31-4 - Meaning of fruit or vegetable wine

Section 31-5 - Meaning of cider or perry

Section 31-6 - Meaning of mead

Section 31-7 - Meaning of sake

14.5.2 A New Tax System (Wine Equalisation Tax) Regulations 2000

Regulation 31-2.01 - Grape wine

Regulation 31-3.01 - Grape wine products

Regulation 31-4.01 - Fruit or vegetable wine

Regulation 31-6.01 - Mead

14.5.3 Taxation Administration Act 1953

Section 382-5 - Keeping records of indirect tax transactions

FOOTNOTES

[1] Section 90 of the Constitution

[2] Section 5 of the Excise Tariff Act imposes excise duty on goods 'manufactured or produced'. In this guide the term manufactured means manufactured or produced unless otherwise specified

[3] Ha & Anor v. State Of New South Wales & Ors; Walter Hammond & Associates Pty Limited v. State Of New South Wales & Ors 97 ATC 4674

[4] Ha & Anor v. State Of New South Wales & Ors; Walter Hammond & Associates Pty Limited v.State Of New South Wales & Ors 97 ATC 4674 at page 4684 per Brennan CJ, McHugh, Gummow and Kirby JJ

[5] For an explanation of customs and excise tariff proposals, see www.aph.gov.au

[6] Section 25 Excise Act 1901

[7] Excise Act 1901 subsection 4(1) (definition of 'storage licence') and Part IV

[8] Excise Act 1901 section 61A

[9] Excise Act 1901 section 7 and Excise Tariff Act 1921 section 1A

[10] Excise Act 1901 section 4 - The term 'licensed manufacturer' means "a person or partnership who holds a manufacturer licence"

[11] Excise Act 1901 Division 1 of Part III

[12] Paragraph 2.28 of the Explanatory Memorandum to the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006

[13] ATO website: 'Stills and distillation': https://www.ato.gov.au/business/excise-and-excise-equivalent-goods/alcohol-excise/spirits-and-other-excisable-beverages/stills-and-distillation/

[14] Excise Act 1901 section 77FC

[15] This includes the blending of imported high strength neutral spirit with domestically produced high strength neutral spirit

[16] Customs Act 1901 Part VAA

[17] Excise Act 1901 section 27

[18] Excise Act 1901 section 51

[19] Excise Act 1901 section 60

[20] Excise Act 1901 subsection 4(1) definition of 'storage licence'

[21] Note that this does not apply to repackaged beer where section 77FC of the Excise Act 1901 applies

[22] Excise Act 1901 section 53

[23] Excise Act 1901 section 60

[24] Excise Act 1901 section 62

[25] Excise Act 1901 section 61A

[26] Excise Act 1901 section 26

[27] Excise Act 1901 section 58 and section 61C

[28] Excise Act 1901 section 54

[29] Excise Act 1901 section 49

[30] Excise Act 1901 section 52

[31] Excise Act 1901 section 54

[32] Excise Act 1901 subsection 86(2)

[33] Excise Act 1901 section 87

[34] Crimes Act 1914 section 6

[35] Criminal Code Act 1995 Schedule - The Criminal Code sections 11.1, 11.2 and 11.5

[36] Excise Act 1901 section 87AA and Crimes Act 1914 section 9

[37] Excise Act 1901 section 91

[38] Excise Act 1901 section 46

[39] Excise Act 1901 section 106

[40] Excise Act 1901 section 50

[41] Excise Act 1901 section 39E

[42] Excise Act 1901 section 39F

[43] Excise Act 1901 section 39O

[44] Taxation Administration Act 1953 Schedule 1 Division 355

[45] Taxation Administration Act 1953 section 355-50 of Schedule 1

[46] Taxation Administration Act 1953 Schedule 1 section 355-50

[47] Taxation Administration Act 1953 Schedule 1 Subdivision 355-C

[48] Excise Act 1901 section 39

[49] Excise Act 1901 sections 25 & 117

[50] Excise Act 1901 section 6A

[51] Excise Act 1901 section 25

[52] Excise Act 1901 section 26

[53] Excise Act 1901 section 27

[54] Excise Act 1901 section 117

[55] Excise Act 1901 section 120

[56] Excise Act 1901 section 51

[57] Excise Act 1901 section 49

[58] Excise Act 1901 section 52

[59] Excise Act 1901 section 92

[60] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[61] Excise Act 1901 sections 39B and 39C

[62] Excise Act 1901 paragraphs 39B(e) and 39B(f)

[63] Excise Act 1901 subsection 39B(f)

[64] Excise Act 1901 subsection 39A(2)(f); Income Tax Assessment Act 1997 section 995-1; Income Tax Assessment Act 1936 subsection 318(1)

[65] Income Tax Assessment Act 1997 section 995-1 for definition of Relative for this purpose

[66] Income Tax Assessment Act 1936 subsection 318(1)

[67] Income Tax Assessment Act 1936 subsection 318(7)

[68] Income Tax Assessment Act 1936 subsection 318(2)

[69] Income Tax Assessment Act 1936 subsection 318(3)

[70] Income Tax Assessment Act 1936 subsection 318(4)

[71] Excise Act 1901 paragraph 39A(2)(fa)

[72] Excise Act 1901 paragraphs 39A(2)(g) and 39A(2)(h)

[73] Excise Act 1901 paragraph 39A(2)(i)

[74] Excise Act 1901 paragraph 39A(2)(ia)

[75] Paragraph 2.28 of the Explanatory Memorandum to the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006

[76] Excise Act 1901 paragraph 39A(2)(j)

[77] Excise Act 1901 paragraph 39A(2)(k)

[78] Excise Tariff Act 1921 section 5

[79] Excise Act 1901 paragraph 39A(2)(l)

[80] Martino and Australian Taxation Office [2002] AATA 1242

[81] Excise Act 1901 paragraph 39G(1)(k)

[82] Excise Act 1901 subsection 39D(4) & section 39DA

[83] Excise Act 1901 subsection 39D(1)

[84] Excise Act 1901 subsection 39D(3)

[85] Excise Act 1901 section 39Q

[86] Excise Act 1901 sections 16-22

[87] Excise Act 1901 section 39Q

[88] Excise Act 1901 subsection 39F(4)

[89] Excise Act 1901 section 120

[90] Note that this is different to the consideration for granting a licence. In granting a licence we can take into account any misleading statement, or if you knowingly made a false statement, in your application. For suspension or cancellation we can consider any statement you make to us in relation to excise matters

[91] Excise Act 1901 subsection 39L(4)

[92] Excise Act 1901 subsection 39L(3)

[93] Excise Act 1901 subsections 39G(1) and 39L(1)

[94] Excise Act 1901 section 39K

[95] Excise Act 1901 subsection 39K(6)

[96] Excise Act 1901 subsection 39N(2) and Excise Act 1901 paragraph 39L(4)(b)

[97] Excise Act 1901 section 77F

[98] Excise Act 1901 section 39Q

[99] Excise Act 1901 subsections 39J(2) and 39L(5)

[100] Excise Act 1901 section 39P

[101] Excise Act 1901 paragraph 39K(1)(a)

[102] Excise Act 1901 paragraph 39K(1)(b)

[103] Excise Act 1901 subsection 39M(1)

[104] Excise Act 1901 section 77E

[105] This does not mean movement within the bounds of your licensed premises, rather movement from licensed premises to another place

[106] Excise Act 1901 section 61A

[107] Excise Act 1901 sections 16-22

[108] Excise Act 1901 section 60

[109] While there is no specific provision in the Excise Act which allows permissions to be cancelled (unlike licences), in accordance with subsection 33(3) of the Acts Interpretations Act 1901 the power to grant the permission provides the power to cancel the permission

[110] Excise Act 1901 section 117A

[111] Excise Act 1901 section 61A

[112] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[113] Excise Tariff Act 1921 subsection 5(1)

[114] Excise Act 1901 section 61

[115] Excise Act 1901 section 61C

[116] Excise Act 1901 paragraph 58(1)(a)

[117] Excise Act 1901 section 61C

[118] Excise Act 1901 paragraph 61C(1)(a)

[119] Excise Act 1901 subsection 61C(1A)

[120] Excise Act 1901 subsection 61C(1B)

[121] Excise Act 1901 subparagraph 61C(1)(b)(ia)

[122] Excise Act 1901 subparagraphs 61C(1)(b)(i) and 61C(1)(b)(ii)

[123] Defined in subsection 4(1) of the Excise Act 1901 by reference to section 328-110 (other than subsection 328-110(4)) of the Income Tax Assessment Act 1997

[124] Defined in subsection 4(1) of the Excise Act 1901 by reference to subparagraph 61C(a)(b)(ia) and section 61C(1AA) of the Excise Act 1901

[125] Excise Act 1901 subsections 61C(1C), (1D) and (1E) and subsections 61C(5) to (7)

[126] Excise Act 1901 paragraph 61C(1C)(b)

[127] Excise Act 1901 paragraphs 162C(1)(d), 162C(1)(e) or 162C(1)(f)

[128] Excise Act 1901 paragraph 61C(3)(a)

[129] Excise Act 1901 Section 61C(3)(g)

[130] Acts Interpretation Act 1901 section 2B

[131] Excise Act 1901 paragraphs 61C(3)(c) and 61C(3)(g)

[132] Excise Act 1901 subsection 61C(3A)

[133] Excise Act 1901 paragraphs 61C(8)(a), 61C(8)(b) and 61C(8)(c)

[134] Excise Act 1901 paragraphs 61C(8)(a), 61C(8)(b) and 61C(8)(c)

[135] Excise Act 1901 paragraphs 61C(8)(d) and 61C(8)(e)

[136] Excise Act 1901 subsection 61C(9)

[137] Excise Act 1901 section 58

[138] See www.ato.gov.au for the latest version of the Schedule to the Excise Tariff Act

[139] For beer, the rate of duty is only applied to the litres of alcohol in excess of 1.15%, as per the rates specified in the Schedule. This is referred to as the dutiable content

[140] Preamble in the Schedule to the Excise Tariff Act 1921

[141] Excise Act 1901 section 65

[142] Excise Tariff Act 1921 section 6A

[143] Excise Act 1901 section 59 and subsection 61C(3)(g)

[144] Excise Act 1901 subsections 59A(1) & (2)

[145] Excise Act 1901 subsection 59A(5)

[146] This allocation considers your normal delivery activity over a period of time. This period will take into account any aberrations and will be long enough to allow a representative average to be calculated

[147] Excise Act 1901 subsection 59A(8)

[148] Excise Act 1901 subsection 61C(5)

[149] Excise Act 1901 subsection 59B(1)

[150] Excise Act 1901 section 154

[151] Excise Act 1901 section 60

[152] Excise Act 1901 section 162C

[153] Excise Act 1901 section 61C(7)

[154] Excise Act 1901 paragraphs 162C(1) (d), (e) and (f)

[155] The settlement period usually specified in a PSP is seven days with lodgment of your excise return required by 4:00 pm on the first working day after the end of your settlement period. However, if you only deliver concessional spirit into the Australian domestic market the settlement period specified in your PSP may be monthly

[156] Taxation Administration Act 1953 Subsection 8AAZMB(2)

[157] Excise Act 1901 paragraphs 61C(3)(a), (b), (c) and (g)

[158] Excise Act 1901 section 61

[159] Excise Act 1901 section 61C

[160] Excise Act 1901 paragraphs 120(1)(iv) and 120(2)(b)

[161] Excise Act 1901 section 120(1)(vi)

[162] Note the legislation uses the term 'delivered for home consumption' (see for example sections 61 and 61C)

[163] See R v. Lyons (1906) 3 CLR 770; Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279; Carmody v. F C Lovelock Pty Ltd (1970) 123 CLR 1; Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951; and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287

[164] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[165] Excise Act 1901 section 78

[166] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 1

[167] The Macquarie Dictionary - Macquarie Multimedia Version 5.0.0

[168] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 2

[169] Excise Regulation 2015 Schedule 1, clause 2

[170] Excise Regulation 2015 Schedule 1, clause 2

[171] Excise Regulation 2015 Schedule 1, clause 2

[172] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 1

[173] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 2

[174] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 3

[175] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 5

[176] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 7

[177] Excise Regulation 2015 Schedule 1, subclause 1(1), table items 19 and 20

[178] Excise Amendment (Supporting Brewers and Distillers) Regulations 2018

[179] Excise Amendment (Supporting Brewers and Distillers) Regulations 2018

[180] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 21, subsection 12(2), table item 5

[181] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 21. From 1 July 2017, the 'excise refund scheme for alcohol manufacturers' took effect and expanded the 'brewery refund scheme' to include distilled and low strength fermented alcoholic beverages whether or not they are sold directly from the manufacturing premises. Between 1 July 2012 to 30 June 2017, 'eligible breweries' were able to claim a refund of 60% of the duty paid on beer manufactured and sold directly from the manufacturing premises, up to $30,000 per year. Prior to 1 July 2012, in relation to beer manufactured at a 'microbrewery', individual claims for refunds were calculated at 60% of the duty paid up to a maximum of $10,000

[182] Excise Regulation 2015 section 6: 'alcohol manufacturer'

[183] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 21

[184] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 21(e)

[185] Excise Regulation 2015 Schedule 1, subclause 1(1), table item 21(e)

[186] Excise Act 1901 section 79 and Excise Regulation 2015 section 14

[187] Excise Regulation 2015 subsection 16(1)

[188] Excise Regulation 2015 subsection 16(2)

[189] Excise Regulation 2015 subsection 16(3)

[190] Excise Act 1901 section 80

[191] Excise Act 1901 section 160A

[192] Excise Act 1901 section 64

[193] Excise Regulation 2015 Schedule 1, clause 2

[194] Excise Regulation 2015 section 55

[195] Excise Regulation 2015 section 10

[196] Excise Regulation 2015 section 11

[197] Excise Regulation 2015 subsection 16(1), table item 3

[198] Excise Act 1901 paragraphs 120(1)(iv) and 120(2)(b)

[199] Excise Act 1901 paragraph 120(1)(vi)

[200] The term used in Excise Act 1901 section 58 is 'entry for home consumption'.

[201] For example, a decision not to issue a movement permission under Excise Act 1901 section 61A

[202] Objections are governed by Part IVC of the Taxation Administration Act 1953 (TAA)

[203] These are conducted in the Administrative Appeals Tribunal or the Federal Court

[204] Excise Act 1901 section 39Q

[205] Excise Act 1901 paragraph 162C(1)(c)

[206] Excise Act 1901 paragraph 162C(1)(d)(e) and (f)

[207] Excise Act 1901 paragraphs 162C(1)(i) and (j)

[208] Excise Act 1901 paragraph 162C(1)(g)

[209] Excise Act 1901 paragraph 162C(1)(h)

[210] Taxation Administration Act 1953 section 14ZU

[211] Excise Act 1901 section 5 and Crimes Act 1914 section 4D

[212] Excise Act 1901 section 127A

[213] Excise Act 1901 section 116

[214] Excise Act 1901 section 151

[215] Excise Act 1901 Part XA

[216] Excise Act 1901 subsections 117(2) and 117B(2)

[217] Excise Act 1901 section 129B

[218] Excise Act 1901 section 6B

[219] Excise Tariff Act 1921 Preamble to the schedule

[220] Excise Act 1901 paragraph 120(1)(iiia)

[221] Excise Act 1901 section 77FC

[222] Assuming beer delivered in bulk containers greater than 48 litres at rates applicable from 5 February 2018

[223] Excise Act 1901 section 53

[224] Excise Act 1901 section 60

[225] Excise Act 1901 section 62

[226] Excise Act 1901 section 39D

[227] Excise Act 1901 section 58 and section 61C

[228] Excise Act 1901 section 54

[229] Excise Act 1901 section 61

[230] Excise Act 1901 section 26

[231] Excise Act 1901 section 27

[232] Excise Act 1901 section 86

[233] Excise Act 1901 section 53

[234] Excise Act 1901 section 49

[235] Excise Act 1901 section 52

[236] Excise Act 1901 section 60

[237] Excise Act 1901 section 50

[238] Excise Act 1901 section 77D

[239] Excise Act 1901 section 50

[240] Excise Act 1901 section 50

[241] Excise Act 1901 subsection 86(2)

[242] Excise Act 1901 section 87

[243] Crimes Act 1914 section 6

[244] Criminal Code Act 1995 The Schedule sections 11.1, 11.2 and 11.5

[245] Excise Act 1901 section 87AA

[246] Excise Act 1901 section 91

[247] Excise Act 1901 section 46

[248] Excise Act 1901 section 106

[249] Excise Act 1901 section 25

[250] Excise Act 1901 section 26

[251] Excise Act 1901 section 27

[252] Excise Act 1901 section 117A

[253] Excise Act 1901 section 61A

[254] Excise Act 1901 section 61

[255] Excise Act 1901 section 77E

[256] Excise Act 1901 section 61C

[257] Excise Act 1901 section 117B

[258] Excise Act 1901 section 51

[259] Excise Act 1901 paragraph 120(1)(vi)

[260] Excise Act 1901 paragraphs 120(1)(iv) and 120(2)(b)

[261] Excise Act 1901 section 49

[262] Excise Act 1901 section 52

[263] Excise Act 1901 section 92

[264] Excise Act 1901 subsection 4(1) - check this should say 'bulk container'

[265] Excise Act 1901 subsection 4(1)

[266] Note the legislation uses the term 'delivered for home consumption' (see for example sections 61 and 61C)

[267] See R v. Lyons (1906) 3 CLR 770; Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279; Carmody v. F C Lovelock Pty Ltd (1970) 123 CLR 1; Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951; and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287

[268] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[269] Excise Act 1901 section 77FK

[270] Excise Act 1901 section 25

[271] A volatile oil obtained from a natural vegetable product by steam distillation. Often mixed with high strength spirit and other substances to manufacture flavourings, essences, scents or toilet preparations

[272] Excise Act 1901 section 25

[273] Excise Act 1901 section 77FK

[274] Excise Act 1901 section 27

[275] See ATO ID 2011/48 Excise and the number of premises specified in a licence to manufacture

[276] Excise Act 1901 section 77FF: specific approval to use spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose. For more information see Chapter 13 - Concessional spirit .

[277] Excise Ruling ER 2012/1 Excise: the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts, see paragraphs 31-35

[278] Excise Act 1901 section 50

[279] Excise Act 1901 section 60

[280] Excise Act 1901 section 50

[281] Excise Act 1901 section 53

[282] Excise Act 1901 section 60

[283] Excise Act 1901 section 62

[284] Excise Act 1901 section 39D

[285] Excise Act 1901 section 58 and section 61C

[286] Excise Act 1901 section 54

[287] Excise Act 1901 section 61

[288] Excise Act 1901 section 26

[289] Excise Act 1901 section 27

[290] Excise Act 1901 section 86

[291] Excise Act 1901 section 53

[292] Excise Act 1901 section 49

[293] Excise Act 1901 section 52

[294] Excise Act 1901 subsection 86(2)

[295] Excise Act 1901 section 87

[296] Crimes Act 1914 section 6

[297] Criminal Code Act 1995 The Schedule, sections 11.1, 11.2 and 11.5

[298] Excise Act 1901 section 87AA

[299] Excise Act 1901 section 91

[300] Excise Act 1901 section 46

[301] Excise Act 1901 section 106

[302] Excise Act 1901 section 25

[303] Excise Act 1901 section 26

[304] Excise Act 1901 section 27

[305] Excise Act 1901 section 117A

[306] Excise Act 1901 section 61A

[307] Excise Act 1901 section 61

[308] Excise Act 1901 section 117B

[309] Excise Act 1901 section 51

[310] Excise Act 1901 section 77FK

[311] Excise Act 1901 section 49

[312] Excise Act 1901 section 52

[313] Excise Act 1901 section 92

[314] Note the legislation uses the term 'delivered for home consumption' (see for example sections 61 and 61C of Excise Act 1901

[315] See R v. Lyons (1906) 3 CLR 770; Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279; Carmody v. F C Lovelock Pty Ltd (1970) 123 CLR 1; Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951; and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287

[316] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[317] See Chapter 10 - Beer for information on how beer is defined for tariff purposes

[318] Wine as defined in subdivision 31-A of A New Tax System (Wine Equalisation Tax) Act 1999

[319] Excise Act 1901 section 4

[320] The Schedule to the Excise Tariff Act 1921

[321] Some products such as rum, whisky, gin and ouzo are spirits and also meet the definition of OEB. This means they are covered by both parts of Item 3 in the Schedule to the Excise Tariff Act. At the sub-heading level they are covered by subitem 3.2 in the Schedule to the Excise Tariff Act, or if they meet the conditions for concessional spirits then they may be covered by subitems 3.5, 3.6, 3.7 or 3.8 in the Schedule to the Excise Tariff Act. Brandy can also be classified to these subitems if the conditions are met

[322] Excise Act 1901 subsections 58(4) and (5)

[323] Excise Act 1901 subsection 77FI(1)

[324] Excise Act 1901 section 77FL

[325] Excise Act 1901 section 53

[326] Excise Act 1901 section 60

[327] Excise Act 1901 section 62

[328] Excise Act 1901 section 39D

[329] Excise Act 1901 section 58 and section 61C

[330] Excise Act 1901 section 54

[331] Excise Act 1901 section 61

[332] Excise Act 1901 section 26

[333] Excise Act 1901 section 27

[334] Excise Act 1901 section 86

[335] Excise Act 1901 section 53

[336] Excise Act 1901 section 49

[337] Excise Act 1901 section 52

[338] Excise Act 1901 section 50

[339] Excise Act 1901 subsection 86(2)

[340] Excise Act 1901 section 87

[341] Crimes Act 1914 section 6

[342] Criminal Code Act 1995 sections 11.1, 11.2 and 11.5

[343] Excise Act 1901 section 87AA

[344] Excise Act 1901 section 91

[345] Excise Act 1901 section 46

[346] Excise Act 1901 section 106

[347] Excise Act 1901 section 25

[348] Excise Act 1901 section 26

[349] Excise Act 1901 section 27

[350] Excise Act 1901 section 117A

[351] Excise Act 1901 section 61A

[352] Excise Act 1901 section 61

[353] Excise Act 1901 section 61C

[354] Excise Act 1901 section 117B

[355] Excise Act 1901 section 51

[356] Excise Act 1901 paragraph 120(1)

[357] Excise Act 1901 section 77FL

[358] Excise Act 1901 paragraphs 120(1)(iv) and 120(2)(b)

[359] Excise Act 1901 section 49

[360] Excise Act 1901 section 52

[361] Excise Act 1901 section 92

[362] Note the legislation uses the term 'delivered for home consumption' (see for example sections 61 and 61C)

[363] See R v. Lyons (1906) 3 CLR 770; Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279; Carmody v. F C Lovelock Pty Ltd (1970) 123 CLR 1; Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951; and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287

[364] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[365] Excise Act 1901 section 24 and Customs Act 1901 Part VAA

[366] Section 77FM of the Excise Act provides that spirit blending is manufacture so the result of blending imported spirit other spirits in Australia is excisable spirit

[367] See Excise (Concessional spirits - class of persons) Determination 2014 (No.1)

[368] Excise Act 1901 section 50

[369] Excise Act 1901 sections 77FD (fortifying spirit) or 77FF (use for industrial, etc. purpose)

[370] Excise Act 1901 section 16

[371] Excise Act 1901 section 20

[372] Excise Act 1901 section 77FH

[373] This will be a condition of your permission to receive fortifying spirit

[374] Excise Act 1901 section 77FH

[375] If the spirit was denatured to an approved formula, then you would purchase spirit that was classified to subitem 3.8 in the Schedule to the Excise Tariff Act and there would be no limits on the volume you could purchase

[376] Excise Act 1901 subsection 77FF(5); Excise concessional spirit approvals guidelines 2016 (No. 2)

[377] Excise Act 1901 subsection 77FF(3)

[378] Excise Act 1901 section 77FH

[379] Explanatory Statement to Excise (Denatured spirits) Determination 2016 (No. 3)

[380] Excise Act 1901 section 77FJ

[381] Excise Act 1901 section 117

[382] Excise Act 1901 section 25

[383] Excise Act 1901 section 26

[384] Excise Act 1901 section 27

[385] Excise Act 1901 section 77FJ

[386] Excise Act 1901 section 117A

[387] Excise Act 1901 section 61A

[388] Excise Act 1901 section 61

[389] Excise Act 1901 section 61C

[390] Excise Act 1901 section 51

[391] Excise Act 1901 paragraph 120(1)(vi)

[392] Excise Act 1901 paragraphs 120(1)(iv) and 120(2)(b)

[393] Excise Act 1901 section 49

[394] Excise Act 1901 section 52

[395] Excise Act 1901 section 92

[396] Note the legislation uses the term 'delivered for home consumption' (see for example sections 61 and 61C)

[397] See R v. Lyons (1906) 3 CLR 770; Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279; Carmody v. F C Lovelock Pty Ltd (1970) 123 CLR 1; Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951; and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287

[398] The term used in Excise Act 1901 section 58 is 'entry for home consumption'

[399] Quoting is a mechanism to relieve or defer wine tax on wine to a later dealing or to give effect to exemption from wine tax for a particular supply of wine. The only form of quotation is the quotation by an entity, registered for GST, of their ABN

[400] A New Tax System (Wine Equalisation Tax) Act 1999 Division 7

[401] Taxation Administration Act 1953 section 382-5

[402] Wine Equalisation Tax Ruling WETR 2009/1 Wine equalisation tax: the operation of the wine equalisation tax system

[403] WETR 2009/2 Wine equalisation tax: operation of the producer rebate for other than New Zealand participants

[404] Wine Equalisation Tax ruling WETR 2006/1: the operation of the producer rebate for producers of wine in New Zealand

[405] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-1

[406] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-2; A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-2.01

[407] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-3; A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-3.01

[408] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-4; A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-4.01

[409] ATO Interpretative Decision ATO ID 2003/951 Excise: Addition of sugar to fruit wine.

[410] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-5

[411] ATO Interpretative Decision ATO ID 2009/15 Wine Equalisation Tax: cider manufacture - adding sugar to apple juice prior to fermentation

[412] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-6; A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-6.01; the Regulations for mead changed on 9 June 2005

[413] A New Tax System (Wine Equalisation Tax) Act 1999 section 31-7

[414] A New Tax System (Wine Equalisation Tax) Regulations 2000 regulations 31-2.01, 31-4.01 and 31-6.01

[415] Standard 4.5.1 of the Australia New Zealand Food Standards Code

SAV/ALCOHOL
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