Edited version of your private ruling

Authorisation Number: 1012449600233

Ruling

Subject: Classification of beverage and entitlement to the producer rebate

Issue 1

Classification of the beverage

Question 1

Is your product a cider for the purposes of section 31-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act)?

Answer

No

Question 2

Is your product an other excisable beverage for the purposes of the Excise Tariff Act 1921 and therefore subject to excise?

Answer

Yes

Issue 2

Producer rebate entitlement

Question 1

Is your product a rebatable wine for the purposes of section 19-5 of the WET Act?

Answer

No

Question 2

Are you entitled to the producer rebate under Division 19 of the WET Act for the manufacture of your product?

Answer

No

This ruling applies for the following periods:

1 July 2011 to 30 June 2013

The scheme commences on:

Unknown

Relevant facts and circumstances

1. You are registered for goods and services tax and wine equalisation tax.

2. You are currently producing an apple cider (your product).

3. The recipe of your product is as follows:

i. Fermentation of apple or pear juice

ii. Add unfermented apple or pear juice

iii. Check cider for heat and stability

iv. Add a substance to the product, which you state will change the colour of the product.

v. The product reaches a final alcohol by volume of less than 5%.

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 Subdivision 31-A

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

A New Tax System (Wine Equalisation Tax) Act 1999 Section 31-5

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

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

Excise Tariff Act 1921 Schedule

Reasons for decision

Issue 1

Question 1

Summary

No, your product is not a cider.

Detailed reasoning

Wine is defined in Subdivision 31-A of the WET Act as grape wine, grape wine products, fruit or vegetable wine, cider or perry, mead or sake. Wine however does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol.

Cider or perry is specifically defined in section 31-5 of the WET Act as a beverage that:

(a) is the product of the complete or partial fermentation of the juice or must of apples or pears; and

(b) has not had added to it, at any time, any ethyl alcohol from any other source, except as specified in the regulations; and

(c) has not had added to it, at any time, any liquor or substance (other than water or the juice or must of apples or pears) that gives colour or flavour, except as specified in the regulations; and

(d) complies with any requirements of the regulations, made for the purposes of section 31-8, relating to cider or perry.

There are currently no regulations that relate to cider.

You will ferment apple or pear juice. You will then add unfermented apple or pear juice to your product. At a later stage, you will then add a substance, which will change the colour of the final beverage.

Paragraph 31-5(c) of the WET Act requires that no liquor or substance (other than water or the juice or must of apples or pears) be added to the beverage that gives colour or flavour. As you will be adding a substance that gives colour, paragraph 31-5(c) of the WET Act has not been met.

Your product is therefore not a cider as defined under section 31-5 of the WET Act.

Question 2

Summary

Yes, your product is an other excisable beverage and is therefore subject to excise.

Detailed reasoning

Having regard to the definitions of wine given in Subdivision 31-A of the WET Act, your product does not meet the definition of grape wine, grape wine product, cider or perry, mead or sake and therefore also falls for consideration as a fruit or vegetable wine.

Fruit or vegetable wine is defined in section 31-4 of the WET Act. It is 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 defines fruit or vegetable wine as a beverage that:

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

i. fruit or vegetables; or

ii. products derived solely from fruit or vegetables; and

(b) has not had added to it, at any time, any ethyl alcohol from any other source, except as specified in the regulations; and

(c) has not had added to it, at any time, any liquor or substance that gives colour or flavour, except as specified in the regulations; and

(d) contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol; and

(e) complies with any requirements of the regulations, made for the purposes of section 31-8, relating to fruit or vegetable wine.

Paragraph 31-4(c) of the WET Act requires that no liquor or substance be added to the beverage that gives colour or flavour. There are currently no regulations governing this requirement. You state that you will add a substance to your product will change the colour of your product. Therefore, paragraph 31-4(c) of the WET Act has not been met.

Paragraph 31-4(d) of the WET Act requires that to be fruit or vegetable wine, the beverage must have an alcohol level between 8% and 22% by volume of ethyl alcohol. As your final product contains less than 5% by volume of ethyl alcohol, paragraph 31-4(d) of the WET Act has also not been met.

Your product therefore does not meet the definition of fruit or vegetable wine under section 31-4 of the WET Act.

Other excisable beverage

The Schedule to the Excise Tariff Act defines an other excisable beverage as any beverage containing more than 1.15% by volume of alcohol, but not beer, wine or brandy.

As outlined previously, your product is not a wine as defined in the WET Act. Your product is also not a beer or brandy as defined in the Schedule to the Excise Tariff Act.

An other excisable beverage is classified as either:

· an other excisable beverage not exceeding 10% by volume of alcohol, or

· an other excisable beverage exceeding 10% by volume of alcohol.

Other excisable beverages not exceeding 10% by volume of alcohol generally include:

· pre-mixed spirit based drinks, and

· fermented products that are not beer or wine.

As your final product contains less than 10% by volume of ethyl alcohol, your product is classified under the Schedule to the Excise Tariff Act as an other excisable beverage not exceeding 10% by volume of alcohol.

Excise is payable on your product at tariff item 2 of the Schedule to the Excise Tariff Act. As of 1 February 2013, the rate of excise payable on your product under the classification an other excisable beverage not exceeding 10% by volume of alcohol is $76.37 per litre of alcohol.

Issue 2

Question 1

Summary

No, your product is not a rebatable wine.

Detailed reasoning

Entitlement to the producer rebate

Division 19 of the WET Act sets out the circumstances where wine producers are entitled to a rebate for certain dealings in wine. The rebate is provided in the form of a WET credit.

Subsection 19-5(1) of the WET Act provides:

You are entitled to a *producer rebate for *rebatable wine for a *financial year if you are the *producer of that wine and:

(a) you are liable to wine tax for a *taxable dealing in the wine during the financial year; or

(b) you would have been liable to wine tax for a dealing in the wine during the financial year had the purchaser not *quoted for the sale at or before the time of the sale.

*denotes a term defined in section 33-1 of the WET Act

Rebatable wine

As outlined above, you are only entitled to the producer rebate for rebatable wine. Rebatable wine is defined in section 33-1 of the WET Act as meaning grape wine, grape wine products, fruit or vegetable wine, cider or perry, mead or sake.

As outlined previously, your product has been classified as an other excisable beverage and is therefore not a grape wine, grape wine product, fruit or vegetable wine, cider or perry, mead or sake.

Your product is therefore not classified as a rebatable wine under section 33-1 of the WET Act.

Question 2

Summary

No, your product is not a rebatable wine and you are therefore not entitled to claim the producer rebate.

Detailed reasoning

As discussed above, subsection 19-5(1) of the WET Act provides an entitlement to a producer rebate for rebatable wine.

As your product is not considered to be a rebatable wine under section 33-1 of the WET Act, you are therefore not entitled to the producer rebate for the manufacture of your product under subsection 19-5(1) of the WET Act.

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