ATO Interpretative Decision

ATO ID 2005/328 (Withdrawn)

Excise

Excise: classification of beer - flavoured with a low alcohol flavour
FOI status: may be released

This ATO ID is withdrawn because of legislative changes to the definition of beer that took effect on 28 August 2009. These legislative changes apply in relation to beverages manufactured or produced on or after 28 Aug 2009. Despite the withdrawal of this ATO ID it still continues to be a precedential view in respect of beverages manufactured or produced on or before 27 August 2009.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does the addition to beer of a flavour containing hops and spirits derived from the fermentation of malt, sugar and water constitute the addition of alcohol from any other source and thereby prevent the beverage from being 'beer' as defined in item 1 of the Schedule to the Excise Tariff Act 1921?

Decision

No. The addition to beer of a flavour containing hops and alcohol derived from the fermentation of malt, sugar and water does not constitute the addition of alcohol from any other source. Therefore, the addition of the flavour does not prevent the beverage from being 'beer' as defined in the Schedule to the Excise Tariff Act.

Facts

A beer base is manufactured which conforms with the definition of 'beer' in the Schedule to the Excise Tariff Act.

A flavour is added to the beer base.

A component of the flavour is alcohol derived from the yeast fermentation of malt, sugar (a carbohydrate) and water.

The flavour also includes hops.

The flavour contains less than 1% by volume of alcohol.

Reasons for Decision

Section 5 of the Excise Tariff Act specifies that duties of excise will be imposed on all goods manufactured or produced in Australia and specified in the Schedule to the Excise Tariff Act. Item 1 of the Schedule includes beer.

Beer is defined in the Schedule as a brewed beverage which:

(a): is the product of the yeast fermentation of an aqueous extract of malted or unmalted cereals, whether or not containing other sources of carbohydrates; and
(b): contains hops, or extracts thereof, or other bitters; and
(c): has not had added to it, at any time, any alcohol from any other source; and
(d): contains more than 1.15% by volume of alcohol.

The beer base meets the requirements of (a), (b) and (d) above. These requirements will continue to be satisfied once the flavour is added.

Therefore, the resulting beverage will be beer provided the addition of the flavour does not result in the addition of any alcohol from any other source.

The alcohol contained in the flavour which is added to the beer is derived from the yeast fermentation of malt, sugar (a carbohydrate) and water.

The term 'from any other source' in paragraph (c) is interpreted as meaning from a source other than the process described in paragraph (a).

Therefore, alcohol is not 'from any other source' if it results from the yeast fermentation of an aqueous extract of malted or unmalted cereals, whether or not containing other sources of carbohydrates.

In this instance, the alcohol contained in the flavour results from the yeast fermentation of an aqueous extract (that is, one containing water) of malted cereals (malt is a collective term for malted cereals). Therefore the requirements of paragraph (a) are satisfied.

Although paragraph (a) requires that beer must be the product of 'an aqueous extract...', we accept that a beverage may still be considered beer, notwithstanding that it contains more than one aqueous extract, provided each extract is produced in the requisite manner.

As the alcohol contained in the flavour which is added to the beer base has been produced in accordance with the requirements of paragraph (a), it follows that the addition of the flavour to the beer base does not constitute the addition of alcohol 'from any other source'.

Thus the addition of a flavour containing alcohol which is derived from the fermentation of malt, sugar (a carbohydrate) and water to a beer base will not exclude the final product from being classified as 'beer' as defined in the Schedule to the Excise Tariff Act.

Date of decision: 14 November 2005

Legislative References:
Excise Tariff Act 1921
   section 5
   The schedule
   item 1

Related ATO Interpretative Decisions
ATO ID 2005/329

Keywords
Beer
Beer excise
Excisable goods
Excise

Business Line: Excise

Date of publication: 25 November 2005

ISSN: 1445-2782

history

	Date:	Version:
	14 November 2005	Original statement
You are here	16 April 2010	Archived

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