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Ruling

Subject: WET - Mead or Fruit

Question 1

Is the fermented blend of honey and fruit juice a fruit or vegetable wine product for the purpose of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?

Answer

No

Question 2

Is the fermented blend of honey and fruit juice a mead for the purpose of the WET Act?

Answer

Yes

This ruling applies for the following periods:

On or after 1 July 2012

The scheme commences:

From date of Ruling

Relevant facts and circumstances

You propose to manufacture a fermented blend of honey and fruit juice.

You advised the production process for the fermented blend of honey and fruit juice is as follows:

· Fruit is crushed and pressed to extract the juice

· Greater than X% honey, Y% or less fruit juice and water are blended and fermentation is started with a commercial yeast

· Fermentation is arrested via cooling of the wine.

· Product is bottled and filtered

Cane sugar of less than Z% of the total volume and will be added at the end just prior to bottling to back sweeten.

The final alcohol percentage of wine will be between W% and there are no colours or flavours added to the product at all.

Relevant legislative provisions

A New Tax System (Wine Equalisation Tax) Act 1999 section 31-4

A New Tax System (Wine Equalisation Tax) Act 1999 section 31-6

A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-4.01

A New Tax System (Wine Equalisation Tax) Regulations 2000 regulation 31-6.01

Reasons for decision

Question 1

'Fruit or vegetable wine' is defined in section 31-4 of the WET Act. It is also subject to certain requirements as specified in A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations) regulation 31-4.01.

'Fruit or vegetable wine', taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that:

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

a) fruit or vegetables; or

b) products derived solely from fruit or vegetables; and

2) has not had added any ethyl alcohol from any other source except grape spirit or neutral spirit; and

3) has not had added any liquor or substance that gives colour or flavour (other than grape spirit or neutral spirit); and

4) contains between 8% and 22% (inclusive) of ethyl alcohol by volume or if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume.

You combine fruit juice, honey and water and ferment this combination. Then add cane sugar for sweetness.

Fruit juice

Fruit juice is the juice of a fruit and therefore falls within the scope of subparagraph 31-4(a)(i) of the WET Act.

Honey

Paragraph 31-4(a) of the WET Act states that fruit or vegetable wine is a beverage that is the product of the complete or partial fermentation of the juice or must of fruit or vegetables or a product derived solely from fruit or vegetables. Paragraph 31-4(c) of the WET Act states that no substance that gives colour or flavour may be added to fruit or vegetable wine at any time, except as specified in the regulations. The WET Regulations do not provide any exceptions to this paragraph. Honey is not a fruit or vegetable or a product derived solely from fruit or vegetables.
It is also a substance that gives colour and flavour to fruit or vegetable wine. This means that the addition of honey to the fruit wine either before fermentation or after will prevent your beverage from being fruit or vegetable wine for the purposes of the WET Act.

Conclusion

As the addition of honey to your product means it will not be considered a fruit or vegetable wine for the purposes of the WET Act it is not necessary to consider the other steps in your process.

Question 2

'Mead' is defined in section 31-6 of the WET Act. It is also subject to certain requirements as specified in WET Regulations regulation 31-6.01.

'Mead', taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that:

1) is the product of the complete or partial fermentation of honey:

2) has not had added any ethyl alcohol from any other source except grape spirit or neutral spirit; and

3) has not had added any liquor or substance that gives colour or flavour (other than grape spirit or neutral spirit) except as specified by the WET regulations which state:

a) herbs or spices may be added during or after the production of mead;

b) caramel may be added to mead after the fermentation process is complete;

c) fruit, or product derived entirely from fruit (which may include fruit concentrate reconstituted according to the recommendations of the manufacturer of the concentrated fruit juice or pulp), may be used in the production of mead only if:

i) the fruit or product has not been fermented; and

ii) the fruit or product is added to the mead before fermentation of the mead; and

iii) after the addition of the fruit or product, and before fermentation, the mead will contain not less than 14% by volume of honey; and

iv) after the addition of the fruit or product, and before fermentation, the fruit or product will constitute not more than 30% by volume of the mead; and

4) contains between 8% and 22% (inclusive) of ethyl alcohol by volume or if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume.

You combine fruit juice, honey and water and ferment this combination. Then add cane sugar for sweetness.

Fruit juice

WET Regulations subregulation 31-6.01(4) allows for the use of fruit or product derived entirely from fruit to be used in the production of mead. You will be using freshly crushed fruit juice in your product. This is added to your product prior to fermentation of the honey and water. At the time of adding the fruit juice but before fermentation it will constitute 30% or less by volume of the mead. Where your product is made according to these specifications the addition of fruit juice will meet the conditions in WET Regulations sub-subregulations 31-6.01 4(a), (b) and (d).

Honey

The WET Regulations specify that after the addition of fruit juice and before fermentation the mead should contain not less than 14% honey. Your product will contain greater than 14% honey before fermentation and therefore will meet the condition in WET Regulations sub-subregulations 31-6.01 4(c).

Sugar

Paragraph 31-6(c) of the WET Act states that no substance that gives colour or flavour may be added to mead at any time, except as specified in the regulations.

The ATO view on the addition of sucrose to fruit wine is published in ATO Interpretive Decision ATO ID 2006/183 Excise: Definition of mead for the purposes of the A New Tax System (Wine Equalisation Tax) Act 1999. It notes that sucrose is usually added to mead to adjust the baume, or sweetness, of the mead. It is not considered to give colour or flavour to the mead. Sucrose is more commonly referred to as cane sugar. Accordingly cane sugar may be used to back sweeten your beverage without causing it to fall outside the definition of 'mead' for the purposes of section 31-1 of the WET Act.

The strength you propose for your product between 8% and 22% is within the range allowed by paragraph 31-6(c) of the WET Act and the WET regulations, which requires mead with added fruit juice contain at least 8% a/v and no more than 22% a/v.

Conclusion

The formulation proposed, properly applied, conforms to all the requirements of section 31-6 of the WET Act and WET Regulations and is therefore mead and meets the definition of an alcoholic beverage for the purposes of the WET Act and hence subject to WET.

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