ATO Interpretative Decision

ATO ID 2003/947 (Withdrawn)

Excise

• This ATO ID is withdrawn as the position stated in this ATO ID is no longer current.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a Renewable Limited Licence issued by the Victorian Government a 'producer licence' for the purposes of determining entitlement to a Commonwealth producer rebate under Division 19 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?

Decision

Yes. A Renewable Limited Licence issued by the Victorian Government is a 'producer licence' for the purposes of determining entitlement to a Commonwealth producer rebate under Division 19 of the WET Act.

Facts

A holder of a Renewable Limited Licence issued by Liquor Licensing Victoria purchases grapes and produces wine. The wine is sold from the licence holder's licensed premises.

Reasons for Decision

Division 19 of the WET Act sets out the circumstances where winemakers may be eligible to claim the Commonwealth producer rebate on certain retail sales and applications to own use (AOUs) of wine.

Subsection 19-5(1) of the WET Act provides that a person is entitled to a Commonwealth producer rebate for rebatable wine if:

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they are the 'producer' of the wine, and

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they are liable to wine equalisation tax (WET) for a retail sale of the wine, and

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the sale is from premises to which their 'producer's licence' relates, and

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the sale does not contravene the State law or Territory law under which the licence was issued, or any conditions to which the licence is subject.

Section 31 of the WET Act defines rebatable wine to mean grape wine, grape wine products, fruit or vegetable wine, or mead.

Subsection 19-5(2) of the WET Act states that wine sold by mail order or on the Internet is taken to be sold from particular premises to which the 'producer's licence' relates if it is sold under the 'producer's licence' to which those premises relate.

Subsection 19-5(3) of the WET Act provides that a person is also eligible to claim the producer rebate for rebatable wine if they are the 'producer' of the wine and they are liable to pay WET for an AOU of the wine.

However, subsection 19-5(4) of the WET Act provides that a person is not entitled to the rebate if:

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the sale is a retail sale and they sell the wine in the course of providing, to the purchaser of the wine, other food that is for consumption on the premises from which it is supplied, or

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the sale is a retail sale and the sale is by mail order or on the Internet and a commission is payable to a third party for the sale, or a third party deducts an amount as commission from the proceeds of the sale; or

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the sum of the eligible retails sales and eligible AOUs exceeds $580,000 (wholesale value) in the financial year in which the sale or AOU occurs.

Section 33-1 of the WET Act states that a 'producer' of rebatable wine means an entity that:

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manufactures the wine, or supplies to another entity the grapes, other fruit, vegetables or honey from which the wine is manufactured; and

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holds a 'producer's licence'.

A person who manufactures wine from grapes they purchase satisfies the requirements of the first limb of the definition of 'producer' as set out above.

The second limb of the definition of 'producer' requires that they hold a 'producer's licence'. A 'producer's licence' is defined in section 33-1 of the WET Act to mean a licence issued under a State law or a Territory law to make retail sales of wine from particular premises:

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as a wine producer or vigneron; or

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in a similar capacity determined in writing by the Commissioner.

In Victoria, the Liquor Control Reform Act 1998 stipulates that to be eligible for a vigneron's licence a person must have at least 1.6 hectares of fruit bearing vines and be producing wine that is at least 70% made from fruit grown or fermented by them. A person who merely purchases grapes and produces wine is not eligible for a vigneron's licence from the Victorian Government.

However, a person who manufactures wine but does not meet the requirements for a vigneron's licence is issued with a Renewable Limited Licence by the Victorian Government. As the Renewable Limited Licence authorises the holder to make retail sales of wine from particular premises as a wine producer, the licence is a producer's licence for the purposes of determining entitlement to a producer rebate. As the licence holder manufactures wine and holds a producer's licence, they are considered to be a 'producer' for the purposes of section 33-1 of the WET Act.

As the licence holder is considered to be a 'producer', where they produce rebatable wine and satisfy the other requirements of subsections 19-5(1), 19-5(3) and 19-5(4) of the WET Act, they will be eligible to claim the Commonwealth producer rebate.

Legislative References:
A New Tax System (Wine Equalisation Tax) Act 1999
   Division 19
   section 31-1
   subsection 19-5(1)
   subsection 19-5(2)
   subsection 19-5(3)
   subsection 19-5(4)

Related Public Rulings (including Determinations)
Wine Equalisation Tax Ruling WETR 2002/2

Keywords
WET rebate
Wine equalisation tax

Business Line:  Excise

Date of publication:  21 October 2003

ISSN: 1445-2782