Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
General outline and financial impact
These bills amend the excise legislation to deal with the case where manufacturers take advantage of the tolerance allowed in food labelling by lowering the alcohol content of a product while labelling the product at a higher alcohol strength. The amendments reduce the competitive advantage gained by manufacturers adopting this practice.
The Excise Laws Amendment Bill (No. 1) 2002 amends the Excise Act 1901 (Excise Act) to enable excise to be charged on the higher of the labelled alcohol content or the actual alcohol content of alcoholic beverages, and to allow the CEO (Commissioner of Taxation) to determine rules for working out the percentage by volume of alcohol in the beverage. This bill inserts a definition of alcoholic beverages and provides for certain unlabelled alcoholic beverages to be treated as labelled.
Consequential amendments will be made to the Distillation Act 1901 and the Spirits Act 1906 and, in Excise Tariff Amendment Bill (No. 2) 2002, to the Excise Tariff Act 1921 . The amendments add references in these Acts to the new provisions in the Excise Actand repeal a redundant provision in the Distillation Act 1901 .
Date of effect: The proposed alterations contained in these bills will take effect from 7.30pm on 14 May 2002, by legal time in the Australian Capital Territory (Budget night).
Proposal announced: The proposal was announced by the Minister for Revenue and Assistant Treasurer on 14 May 2002 via Media Release.
Financial impact: The expected net revenue gain from the imposition of excise on the higher of labelled or actual alcoholic strength is $4.3 million in 2002-2003, $4.6 million in 2003-2004, $4.9 million in 2004-2005, and $5.1 million in 2005-2006.
Compliance cost impact: Where products are labelled at a higher than actual alcoholic strength the manufacturer will be required to label the product to reflect the actual alcoholic strength or pay excise duty on the labelled alcoholic strength. Additional compliance cost will occur only where a manufacturer chooses to relabel a product to reflect the actual alcohol content of the product.