ATO Interpretative Decision

ATO ID 2006/87 (Withdrawn)

Excise

• This ATO ID is withdrawn as it is superseded by Wine Equalisation Tax Ruling WETR 2009/1
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the buyer's premium paid to an auction house by the purchaser included in the taxable value of the wine for the purposes of Division 5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) where the person who manufactured the wine (the wine producer) makes a wholesale sale of the wine at auction?

Decision

No. The buyer's premium paid to the auction house by the purchaser is not included in the taxable value of the wine for the purposes of Division 5 of the WET Act where the wine producer makes a wholesale sale of the wine at auction.

Facts

A wine producer sells wine through an auction house which acts as selling agent for the wine producer.

The sale is a wholesale sale.

The wine producer is registered for GST.

The auction house charges the wine producer a commission for auctioning the wine.

The wine producer receives the selling price minus the commission.

In addition to the selling price the auction house charges the purchaser a buyer's premium for services provided to the purchaser.

The auction house retains the buyer's premium.

Reasons for Decision

Division 5 of the WET Act sets out the general rules for taxing assessable dealings with wine.

The Assessable Dealings Table in section 5-5 in Division 5 of the WET Act lists all the assessable dealings that are subject to WET. The amount of WET payable on an assessable dealing is specified in subsection 5-5(3) of the WET Act and is 29% of the taxable value of the assessable dealing. The taxable value is determined by reference to Column 5 of the Assessable Dealings Table in section 5-5.

Where wine is sold by wholesale by a person who manufactured the wine the relevant assessable dealing is AD1a in the Assessable Dealings Table in section 5-5 of the WET Act. The normal taxable value specified in the table for AD1a is:

the *price (excluding wine tax and GST) for which the wine was sold.

Price is defined in section 33-1 of the WET Act as having the meaning given by section 9-75 of the A New Tax System (Goods and Services) Tax Act 1999 (GST Act).

Price is defined in section 9-75 of the GST Act as the sum of:

(a)

so far as the *consideration for the supply is consideration expressed as an amount of money - the amount without any discount for the amount of GST (if any) payable on the supply: and

(b)

so far as the consideration is not consideration expressed as an amount of money - the *GST inclusive market value of that consideration.

Where wine is sold by auction and the auction house charges the purchaser a buyer's premium for services provided to the purchaser there are two separate supplies for GST purposes:

(a)

there is a supply of the wine by the seller to the purchaser, and

(b)

there is a supply of services by the auction house to the purchaser.

For the purposes of section 9-75 of the GST Act the price of these supplies is:

(a)

for the supply of the wine by the seller to the purchaser - the amount of consideration paid by the purchaser to the seller, and

(b)

for the supply of services by the auction house to the purchaser (the buyer's premium) - the amount of consideration paid by the purchaser to the auction house.

Consideration is defined in section 9-15 of the GST Act and includes:

(1)(a)

any payment, or any act or forbearance, in connection with a supply of anything; and

(b)

any payment, or any act or forbearance, in response to or for inducement of a supply of anything.

As the reference to price in the taxable value specified for AD1a in the Assessable Dealings Table in section 5-5 of the WET Act has the same meaning as price specified in section 9-75 in the GST Act for the supply of the wine, it follows that the taxable value of the wine for WET purposes is the amount paid for the supply of the wine by the purchaser to the seller.

The service that is provided by the auction house to the purchaser in return for the buyer's premium is a separate supply from the supply of the wine by the wine producer. Because the taxable value for the sale of wine is determined by reference only to the price for the supply of the wine, the amount paid by the purchaser of the wine to the auction house as the buyer's premium is not included in the taxable value of the wine.

Legislative References:
A New Tax System (Wine Equalisation Tax) Act 1999
   section 5-1
   section 5-5

Other References:
Wine Equalisation Tax Ruling WETR 2004/1
Goods and Services Tax Ruling GSTR 2000/37

Keywords
Excise Wine Equalisation Tax Industry Group
WET taxable value
Wine
Wine equalisation tax

Business Line:  Excise

Date of publication:  24 March 2006

ISSN: 1445-2782