Edited version of private ruling

Authorisation Number: 1011551178538

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Ruling

Subject: WET and producer rebate

Question 1

Can an entity that has purchased a wine making business from another entity as a going concern claim a producer rebate when they sell the stock purchased with the business, given that they have taken over the business that produced the wine?

Answer

No, an entity that has purchased a wine making business from another entity as a going concern is not entitled to claim the producer rebate when they sell the stock purchased with the business.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are registered for goods and services tax (GST) and wine equalisation tax (WET).

You purchased a wine making business as a 'going concern'.

Together with the business you also purchased the stocks of wine that the previous
business owners had produced.

The wine has already been bottled.

Relevant legislative provisions

A New Tax System (Wine Equalisation Tax) Act 1999 - Division 19

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 19-5

A New Tax System (Wine Equalisation Tax) Act 1999 - Division 31

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 31-1

Summary

As you are not the producer of the wine that was sold to you with the wine making business that you purchased as a going concern, you are not entitled to a producer rebate for the wine.

Detailed reasoning

Division 19 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act), sets out the circumstances where wine producers are entitled to a rebate for certain dealings with wine.
The rebate is provided in the form of a wine equalisation tax (WET) credit claimed on a producer's activity statement.

Section 19-5 of the WET Act provides that you are entitled to a producer rebate for rebatable wine for a financial year if you are the 'producer' of that wine and

you are liable to wine tax for a taxable dealing in the wine during the financial year, or

you would have been liable to wine tax during the financial year had the purchaser not quoted for the sale at or before the time of sale.

The term producer rebate refers to the rebate that a producer of rebatable wine is entitled to under Division 19 of the WET Act.

Rebatable wine

Rebatable wine is restricted to those things that are defined as wine and further explained in Division 31 of the WET Act to mean grape wine, grape wine products, fruit or vegetable wine, cider, perry, mead or sake. Grape wine is a beverage that:

is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes; and

does not contain more than 22% of ethyl alcohol by volume.

Producer of the wine

The term 'producer' is exhaustively defined in section 33-1 of the WET Act as:

an entity that manufactures the wine, or supplies to another entity the
grapes, other fruit, vegetables or honey from which the wine is manufactured.
There are two limbs to this definition of producer. The first limb focuses on whether the entity manufactures the wine, and the second limb focuses on whether the entity provides the 'grapes, other fruit, vegetables or honey, from which the wine is manufactured'. As you did not supply the grapes, other fruit, vegetables or honey from which the wine was manufactured the second limb does not apply to your circumstances.

Manufacture

The term manufacture is defined in section 33-1 of the WET Act as:

Manufacture includes the following:

(a) production;

(b) combining parts or ingredients so as to form an article or substance that is
commercially distinct from the parts or ingredients;

(c) applying a treatment to foodstuffs as a process in preparing them for human consumption;

but does not include any prescribed combination of parts or ingredients.

In relation to the wine you purchased, you did not undertake any processes of manufacture, rather you simply purchased stocks of wine that had been finished and bottled.

Therefore, as you are not the producer of the wine that was sold to you, you are not entitled to a producer rebate for the wine.

Further issues for you to consider

Any wine that you produce in accordance with Section 19-5 of the WET Act after acquiring the business may qualify for a producer rebate.

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