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Ruling

Subject: Fruit and Vegetable Wine

Question:

Are your fruit based products 'fruit or vegetable wine' products for the purpose of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) and therefore subject to WET?

Answer:

Yes, your fruit based products are 'fruit and vegetable wines' for the purposes of the WET Act and are therefore subject to WET.

Relevant facts and circumstances

Relevant legislative provisions

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

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

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

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

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

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

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

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

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 33-1

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

Reasons for decision

Wine is defined in section 33-1 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) as having the meaning given by Subdivision 31-A of the WET Act.

Section 31-1of the WET Act states that wine means any of the following:

However, wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol.

Each of the above headings are further defined in the WET Act. Having regard to these definitions, the fruit based products you intend to produce fall for consideration as fruit or vegetable wines under section 31-4 of the WET Act and are also subject to certain requirements as specified in regulation 31-4.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).

Section 31-4 of the WET Act states that the meaning of a fruit or vegetable wine, taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that:

In order for us to determine whether your products are a fruit and vegetable wine for the purposes of the WET Act and the WET Regulations, we need to consider whether your products meet the requirements above.

Subsection 31-4 (a)

A product is the juice of a fruit and therefore falls within the scope of sub-paragraph 31-4(a)(i) of the WET Act. Fruit is also used in Product 2 and as such also falls within the scope of sub-paragraph 31-4(a)(i) of the WET Act.

Subsection 31-4 (b) & (c)

The recipes for the products indicate that no additional ethyl alcohol (from any source) will be added to any of the products, nor any colours or flavours. Whilst you state sugar will be added for taste, the addition of sugar to fruit wine does not constitute the addition of a flavour, and therefore does not prevent the beverage from being a fruit or vegetable wine per section 31-4 of the WET Act. As such, both paragraphs 31-4(b) & (c) are satisfied.

Subsection 31-4 (d)

The strength proposed for the products all fall between X% and Y% alcohol by volume and as such the strength proposed is within the range allowed by paragraph 31-4(d).

The formulation proposed for all products, conforms to the requirements of section 31-4 of the WET Act and WET Regulations, meeting the definition of fruit and vegetable wine hence subject to WET.

Accordingly, the formulation proposed for all of your fruit based products, conform to the requirements of section 31-4 of the WET Act and WET Regulations and as such are considered 'fruit or vegetable wine' products for the purpose of WET Act and are therefore subject to WET.

Wine tax is imposed on assessable dealings with wine, unless an exemption applies. If the dealing is taxable, wine tax is calculated on the taxable value of the dealing. If the wine, or some part of the wine, has already been subject to a taxable dealing, then a credit for that earlier tax may be claimed as an offset against the tax payable on the later dealing.

More information regarding WET can be obtained from Wine Equalisation Tax Ruling WETR 2009/1 Wine equalisation tax: the operation of wine equalisation tax system.

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