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Edited version of your private ruling
Authorisation Number: 1012552146624
Ruling
Subject: Wine equalisation tax
Question 1
Is the delivery service offered to your customers a separate supply from the supply of wine if the delivery service is under a separate contract or agreement?
Answer
Yes.
Question 2
Is the price for the delivery of wine excluded from the taxable value of the wine under section 5-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) if the delivery service is under a separate contract or agreement?
Answer
Yes.
Question 3
Are you entitled to apportion the total invoiced amount (which covers both the supply of the wine and the supply of the delivery service) when calculating the taxable value of your wine sold by wholesale if the delivery service is under a separate contract or agreement?
Answer
Yes.
This ruling applies for the following periods:
2013-14 income year
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You are registered for goods and services tax (GST) and for wine equalisation tax (WET).
You make wholesale sales of wine.
You intend to separate the agreement for the sale of your wine and the agreement for the delivery of your wine.
Customers are free to make their own arrangements for the collection or delivery of the wine from your warehouse.
If delivery is not requested by the customer, ownership of the wine will transfer to the customer at the point of dispatch from the warehouse and risk in the wine will pass to the customer when the wine is dispatched.
If delivery is requested by the customer, ownership of the wine will transfer to the customer upon delivery.
Delivery charges are not payable in order for the customer to obtain ownership of the wine.
The charge for the delivery service will be a competitive commercial charge.
Where customers choose to not have their wine delivered by you, the price of the wine will be
separately disclosed on the tax invoice and will be subject to WET and GST.
Where customers choose to have their wine delivered by you, the delivery charge will be separately disclosed on the tax invoice and will only be subject to GST.
Relevant legislative provisions
A New Tax System (Wine Equalisation Tax) Act 1999 section 5-5
A New Tax System (Wine Equalisation Tax) Act 1999 section 27-5
Reasons for decision
Issue 1
Is the delivery service offered to your customers a separate supply from the supply of wine if the delivery service is under a separate contract or agreement?
Summary
Yes, the delivery service is a separate supply from the supply of the wine.
Detailed reasoning
Whether a delivery service is a separate supply or whether the delivery forms part of the supply of wine will depend upon the terms of the contract or agreement entered into between the seller and the purchaser of the wine.
Paragraphs 2 and 3 of Goods and Services Tax Determination GSTD 2002/3 Goods and services tax: how do I account for GST when I supply taxable goods, non-taxable goods and delivery services together? provide that where you supply goods and a delivery service under one contract, the goods and the delivery service are separate parts of a mixed supply. However, where the purchaser of goods has a genuine choice about whether their goods are delivered, the delivery service is treated as a separate supply for GST purposes.
You state that delivery of your wine will only be undertaken by you if your customers request, the delivery charges are not payable in order for your customers to obtain ownership of the wine and your customers are free to make their own arrangements for the collection or delivery of the wine from the warehouse. Therefore, the delivery service is a separate supply for GST purposes.
Issue 2
Is the price for the delivery of wine excluded from the taxable value of the wine under section 5-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) if the delivery service is under a separate contract or agreement?
Summary
Yes, the price for delivery of wine is excluded from the taxable value of the wine.
Detailed reasoning
Section 5-5 of the WET Act, which contains the general rules for taxing assessable dealings with wine, provides that WET is payable at the rate of 29% of the taxable value of the dealing. For a taxable dealing with wine that is a wholesale sale, the taxable value is the price for which the wine is sold (excluding WET and GST).
Paragraph 104 of Wine Equalisation Tax Ruling WETR 2009/1 Wine equalisation tax: the operation of the wine equalisation tax system provides that where goods (including wine) are sold under a contract that includes delivery, the price for which those goods are sold will include the delivery charges. If payment for the delivery of wine must occur for the purchaser to obtain good title to the wine or ownership of the wine, then the delivery charges will form part of the taxable value.
Paragraph 105 of WETR 2009/1 however provides that if the delivery charges for the wine are the subject of a separate contract, the delivery charges will not usually form part of the sale price.
Delivery charges, including freight, postage or insurance, will not form part of the sale price of the wine if the following conditions are met:
· the parties to the contract of sale genuinely intend property in the wine to pass without delivery at the price stated (for example, there are no additional charges to customers who arrange for their own delivery and reasonable access is provided for them to collect the wine themselves); and
· the amount for delivery is a competitive commercial charge, rather than reflecting a reduction in the price of the wine. That is, the charge does not exceed the amount that would have been charged to the buyer by an independent carrier (taking into account all the circumstances surrounding the transaction, including the buyer's ability to negotiate discounts).
The information provided shows that:
· Delivery will only be undertaken if the customer requests.
· Delivery charges are not payable in order for the customer to obtain ownership of the wine.
· If delivery of the wine is not requested, ownership of the wine will transfer to the customer at the point of dispatch.
· If delivery of the wine is requested, ownership of the wine will transfer to the customer upon delivery, and
· The charge for the delivery service will be a competitive commercial charge.
Considering the above, the delivery charges (if part of a separate agreement) will therefore not form part of the price for which the wine is sold. Subsequently, the delivery charges will be excluded from the taxable value of the wine under section 5-5 of the WET Act.
Issue 3
Are you entitled to apportion the total invoiced amount (which covers both the supply of the wine and the supply of the delivery service) when calculating the taxable value of your wine sold by wholesale if the delivery service is under a separate contract or agreement?
Summary
Yes, you are entitled to apportion your total invoiced amount.
Detailed reasoning
Section 27-5 of the WET Act provides that WET must be separately specified on the tax invoice for wholesale sales of wine.
As discussed previously, WET is payable at the rate of 29% of the taxable value of the dealing. For a taxable dealing with wine that is a wholesale sale, the taxable value is the price for which the wine is sold (excluding WET and GST).
If the delivery charges are part of a separate agreement, they will not form part of the taxable value of the wine. As such, the WET specified on a tax invoice (that includes the supply of wine and the delivery supply as separate supplies) will be calculated on the supply of wine only.
Subsequently, when calculating the WET to be specified on the tax invoice, you are entitled to apportion your total invoiced amount between the supply of the wine and the supply of the delivery service.
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