ATO Interpretative Decision
ATO ID 2006/88
Excise
Wine Equalisation Tax: quoting groundFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is wine purchased for laboratory analysis as part of a research project used as a material in manufacture or other treatment or processing for the purposes of paragraph 13-5(1)(c) of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?
Decision
No. Wine purchased for laboratory analysis as part of a research project is not used as a material in manufacture or other treatment or processing for the purposes of paragraph 13-5(1)(c) of the WET Act.
Facts
Samples of bottled and cask wine are purchased for the purpose of conducting research analysis to assess the presence and level of a particular chemical in the wine.
Reasons for Decision
Paragraph 13-5(1)(c) of the WET Act provides that an entity is entitled to quote its ABN for a dealing with wine if, at the time of quoting, the entity has the intention of:
The term 'manufacture' is defined in section 33-1 of the WET Act to include:
On the above definition, using the wine for laboratory analysis as part of a research project is not use as a material in manufacture. The question then, is whether wine purchased for laboratory analysis as part of a research project is used as, '...a material in...other treatment or processing'.
The terms 'treatment' or 'processing' are not defined in the legislation and therefore take on their ordinary meaning.
The Macquarie Dictionary, 2001,rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines 'treatment' to mean, '...subjection to some agent or action', and 'process' is defined as:
verb
- 11.
- to treat or prepare by some particular process...
Adjective
- 16.
- prepared or modified by an artificial process
In the Sales Tax case FC of T v. Hamersley Iron Pty Ltd 80 ATC 4509; (1980) 11 ATR 302; 81 ATC 4582; (1981) 12 ATR 429 in the Supreme Court of Victoria, it was held that 'treatment' should be given its ordinary meaning and, as to 'process' Gobbo J stated at first instance that:
Process as a noun is defined as follows:
'A continuous and regular action or succession of actions taking place or carried on in a definite manner, and leading to the accomplishment of some result; a continuous operation or series of operations.'
As a verb it is defined as follows:
'To subject or treat by a special process.'
The Shorter Oxford Dictionary defines process as follows:
'A continuous action or succession of actions taking place or carried on in a definite manner; a continuous operation or series of operations; a particular method of operation in any manufacture.'
The relevant meaning in the section edition of Webster's New International Dictionary is:
'To subject (esp. raw material) to a process of manufacture, development, preparation for the market; to convert into marketable form.'
The normal use of the verb process is exemplified as follows - to process milk by pasteurising, to process grain by milling and to process cotton by spinning. These meanings all suggest that a change in nature form or condition is effected. I am disposed to the view that even in processing some change must result if this procedure is to be regarded as a process.
It could be argued that where laboratory analysis of the wine involves treating it in a way such that the wine is separated into its constituent elements, this constitutes treating or processing the wine in accordance with the ordinary meaning of the words 'treatment' or 'process'.
However, in the context of paragraph 13-5(1)(c) of the WET Act, the wine must be used as, '...a material in...other treatment or processing...'
Since the legislation provides that the wine must be used as a material 'in' other treatment or processing, this implies that the wine must be used in the treatment or processing of another distinct thing, as opposed to the wine itself being treated or processed.
Therefore, research analysis of wine does not constitute use as a material in manufacture or other treatment or processing for the purposes of paragraph 13-5(1)(c) of the WET Act.
Date of decision: 20 March 2006
Legislative References:
A New Tax System (Wine Equalisation Tax) Act 1999
section 13-5
subsection 13-5(1)
section 33-1
paragraph 13-5(1)(c)
Case References:
FC of T v. Hamersley Iron Pty Ltd
80 ATC 4509
(1980) 11 ATR 302
81 ATC 4582
(1980) 12 ATR 429
Related Public Rulings (including Determinations)
Wine Equalisation Tax Ruling 2004/1
Keywords
Treatment
EGCS processing
Wine equalisation tax
ISSN: 1445-2782