ATO Interpretative Decision

ATO ID 2003/883 (Withdrawn)

Excise

Wine Equalisation Tax: Whether a beverage made by addition of grape spirit or neutral spirit to fruit juice is 'wine'
FOI status: may be released

This ATO ID is withdrawn as it does not accurately reflect the ATO view.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a beverage made by the addition of grape spirit or neutral spirit to fruit juice and which contains between 15% and 22% (inclusive) of ethyl alcohol by volume 'wine' as defined in section 31-1 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?

Decision

Yes. A beverage made by the addition of grape spirit or neutral spirit to fruit juice and which contains between 15% and 22% (inclusive) of ethyl alcohol by volume is 'wine' as defined in section 31-1 of the WET Act.

Facts

Juice is produced by crushing fruit.

Grape spirit or neutral spirit is added to the juice to produce a beverage with an alcohol content between 15% and 22% (inclusive) of ethyl alcohol by volume.

Reasons for Decision

Wine is defined in subsection 31-1(1) of the WET Act as meaning grape wine, grape wine products, fruit or vegetable wine, cider or perry, mead and sake. Each of these beverages is in turn defined.

Fruit or vegetable wine is defined in section 31-4 of the WET Act as a beverage that:

(a)

is the product of the complete or partial fermentation of the juice or must of:

(i): fruit or vegetables; or
(ii): products derived solely from fruit or vegetables; and

(b)

has not had added to it, at any time, any ethyl alcohol from any other source, except as specified in the regulations; and

(c)

has not had added to it, at any time, any liquor or substance that gives colour or flavour, except as specified in the regulations; and

(d)

contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol; and

(e)

complies with any requirements of the regulations, made for the purposes of section 31-8 of the WET Act, relating to fruit or vegetable wine.

The, A New Tax System (Wine Equalisation Tax) Regulations 2000 allow the addition of ethyl alcohol from grape spirit or neutral spirit but specify that if grape spirit or neutral spirit has been added, the beverage must contain between 15% and 22% (inclusive) of ethyl alcohol by volume.

The definition of 'fruit or vegetable wine' requires that the beverage be the product of the complete or partial fermentation of the juice or must of fruit or vegetables or products derived from fruit or vegetables. The word partial is not defined in the WET Act and so takes on its ordinary meaning. 'Partial' is defined in The Macquarie Dictionary, 2001, 3rd edn, The Macquarie Library Pty Ltd, NSW as meaning:

1.: relating to or affecting a part
2.: being such in part only; not total or general; incomplete.

Accordingly, 'partial' fermentation for the purposes of the definition of fruit or vegetable wine means fermentation in part or incomplete fermentation.

When fruit is crushed, naturally occuring yeast on the skin of the fruit causes the process of fermentation of the juice to commence almost immediately. The addition of alcohol arrests this process of fermentation.

Although the fermentation process may only have resulted in the production of a minor amount of ethyl alcohol before it is arrested by the addition of alcohol it is nevertheless 'fermentation in part' or 'incomplete fermentation' and is considered to constitute 'partial' fermentation for the purposes of the definition of 'fruit or vegetable wine'.

Accordingly, a beverage made by the addition of grape spirit or neutral spirit to fruit juice and which contains between 15% and 22% (inclusive) of ethyl alcohol by volume meets the definition of 'fruit or vegetable wine' and is therefore 'wine' as defined in section 31-1 of the WET Act.

Date of decision: 9 September 2003

Legislative References:
A New Tax System (Wine Equalisation Tax) Act 1999
   section 31-1
   section 31-4
   paragraph 31-4(a)

Other References:
The Macquarie Dictionary, 2001, 3rd edn, The Macquarie Library Pty Ltd, NSW

Keywords
Fortified wine
Fruit wine
Wine
Wine equalisation tax

Business Line: Excise

Date of publication: 3 October 2003

ISSN: 1445-2782

history

	Date:	Version:
	9 September 2003	Original statement
You are here	25 June 2004	Archived

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