Edited version of your private ruling

Authorisation Number: 1012559022558

Ruling

Subject: WET - Quoting

Question 1

Are you required to pay WET for purchases of bulk wine in relation to which you have quoted?

Answer

No. WET will not be included in the purchase price of bulk wine for which you have quoted your ABN in the approved form at or before the time of sale.

Question 2

Will an amount of WET be specified on a tax invoice issued to you for wine that you purchase under quote?

Answer

No. WET will not be specified on the tax invoice provided to you as WET is not included in the purchase price.

Relevant facts and circumstances

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

You account for GST on accrual method.

You purchases bulk wine from various suppliers under a 'periodic quote'.

You have supplied a copy of a 12 month periodic quote for the period 1 January 20XX to 31 December 20XX.

You have indicated on your periodic quotation that you intend to make a GST-free supply of all the wine you purchase.

The supplier provides tax invoices in relation to your purchases of bulk wine listing goods and services tax (GST) amounts only.

You have the wine stabilised and bottled (corked or screwed depending on the client).

The function of stabilisation and bottling of your wine is sometimes outsourced by you.

The bulk wine purchased is (mainly) for immediate export.

Relevant legislative provisions

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

A New Tax System (Wine Equalisation Tax) Act 1999 Division 7

A New Tax System (Wine Equalisation Tax) Act 1999 subsection 7-10(1)

A New Tax System (Wine Equalisation Tax) Act 1999 subsection 13-20(1)

A New Tax System (Wine Equalisation Tax) Act 1999 subsection 13-20(2)

Reasons for decision

Question 1

Summary

WET will not be included in the purchase price of bulk wine for which you have quoted your ABN in the approved form at or before the time of sale.

Detailed reasoning

Section 5-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) provides that a dealing with wine, that is covered by the Assessable Dealings Table (ADT), will be a taxable dealing where:

· the entity that has the dealing is registered or required to be registered for goods and services tax (GST)

· the dealing occurs after 1 July 2000; and

· and no exemption applies under Division 7 of the WET Act.

Division 7 of the WET Act provides the situations where assessable dealings with wine will be exempt from WET. In particular, subsection 7-10(1) of the WET Act provides that a 'sale is not taxable if the purchaser quotes for the sale at or before the time of the sale'.

Quoting is a mechanism to relieve or defer wine tax on wine to a later assessable dealing or to give effect to an exemption from wine tax for a particular supply of wine.

'Quoting' refers to a quotation of the purchaser's ABN to the seller of wine.

Quoting grounds

An entity is only able to quote (and purchase wine exempt from WET) where it has a 'quoting ground'. Section 13-5 of the WET Act provides that you will have a quoting ground where, at the time of quoting you intend dealing with the wine in any of the following ways (emphasis added):

· sell the wine by wholesale or indirect marketing sale while the wine is in Australia;

· sell the wine by any kind of sale while it is in Australia and the quoter is, at the time of quoting, mainly a wholesaler (see paragraphs 180 and 181 of this Ruling for an explanation of when you are mainly a wholesaler);

· use the wine as a material in manufacture or other treatment or processing, whether or not it relates to or results in other wine; or

· make a supply of wine that will be GST-free.

However, an entity is not entitled to quote unless they are registered for GST.

Situations where the purchaser is entitled to quote - Exporting

You have advised that you purchase wine under quote on the basis that it will be exported as a GST-free supply. An example of an export of wine being a GST-free supply is where it is exported (and is not re-imported) within 60 days (or such further period allowed by the Commissioner) after the earlier of the day any of the consideration is received or an invoice is issued for the sale of the wine.

Form of quoting

Importantly, for a quote to be effective and give rise to a WET exemption, it must meet the conditions of section 13-20 of the WET Act, which states:

(1) A *quote… must be made in the approved form.

(2) A *quote for a dealing is not effective unless it is made at or before the time of the dealing.

The only form of quotation is the quotation by an entity registered for GST of their ABN. Although quoting an ABN enables wine to be supplied without wine tax being payable, the supply may still be subject to GST.

A quotation of an ABN must be made in writing, in the approved form, at or before the time of the dealing.

Paragraphs 174 to 199 inclusive of Wine Equalisation Tax Ruling WETR 2009/1 Wine equalisation tax: the operation of the wine equalisation tax system (WETR 2009/1), provide further explanation about when a quote will be in the approved form.

Appendix A of WETR 2009/1 sets out the approved forms for quoting your ABN, including the periodic quotation form.

Where you are registered for GST and have a quoting ground, you may quote in relation to individual purchases of wine or, as section 13-5 of the WET Act provides, you may make a 'periodic quote' for purchases of wine that you propose to make from an entity during a period not exceeding 12 months.

You have advised that you purchase bulk wine from the supplier under a 12 month periodic quote.

If you make a periodic quotation on or before the first day to which the quote relates, you are treated as having quoted for all purchases from the supplier during the period.

Importantly, if you are not entitled to quote for a particular purchase of wine during the period covered by the periodic quotation, you must notify the supplier of that fact in the approved form (also set out in Appendix A of WETR 2009/1). Failure to do so is an offence against the WET Act.

Additionally, if, at the time of quoting, you intend to make a GST-free supply of the wine you are purchasing (for example, a GST-free export), you must notify the supplier of this on the quotation form. Failure to notify the supplier of this is an offence. The entity will not need to notify the producer if they purchase wine into stock and subsequently make a GST-free supply of that wine unless they had the intention at the time of purchase of making a GST-free supply of that particular wine.

Therefore, where you purchase wine for export as a GST-free supply and you have quoted your ABN in the approved form at or before the time of the purchase, the sale of the wine to you by the supplier will be exempt from WET. However, it may include GST.

Question 2

Summary

WET will not be specified on the tax invoice provided to you as WET is not included in the purchase price.

Detailed reasoning

Paragraphs 161 and 162 of Wine Equalisation Tax Ruling WETR 2009/1 discusses the requirement for an entity to specify the amount of wine tax on invoices. They provide:

· Where an entity sells wine by wholesale for a price that includes wine tax, they must specify the amount of the wine tax on the invoice given to the purchaser. The wine tax can be specified as a separate amount for each item of taxable wine on the invoice on a line by line basis or as a total amount for all the taxable wine on the invoice.

· An entity does not have to specify the amount of wine tax where they sell the wine by retail, that is, to the end user, even if wine tax is payable on that transaction.

As stated in the answer to Question 1, upon the receipt of an effective 'periodic quote' a supplier does not need to specify WET on the tax invoice as there is no WET liability incurred.

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