Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012563437796

Ruling

Subject: Wine equalisation tax (WET) - Classification of grape wine product

Questions 1 & 2

Summary

Both your beverages meet the definition of a 'grape wine product' for the purposes of the WET Act.

Relevant facts and circumstances

· You are a winery which produces a fruit flavoured grape wine based beverage

· You are registered for WET

· You provide grape wine to Entity One who blends it with various flavours (such as lemon, orange etc) to produce two products on your behalf.

· The various natural flavours are free of alcohol.

· You have supplied the recipes for 1000L of finished beverage:

· You provided the following points in support of both products being a grape wine product for the purposes of the WET Act:

Relevant legislative provisions

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

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

A New Tax System (Wine Equalisation Tax) Act 1999 Subsection 31-1(2)

A New Tax System (Wine Equalisation Tax) Act 1999 Section 31-3

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

A New Tax System (Wine Equalisation Tax) Regulations 2000 Regulation 31-2.01

Excise Tariff Act 1921

Reasons for decision

Wine equalisation tax (WET) applies to 'wine' as defined in section 33-1 of the WET Act.

Section 33-1 of the WET Act provides that 'wine' has the meaning given by Subdivision 31-A. Subsection 31-1(1) in Subdivision 31-A provides that 'wine' means any of the following (emphasis added):

(a) grape wine;

(b) grape wine products;

(c) fruit or vegetable wine;

(d) cider or perry;

(e) mead;

(f) sake.

However, subsection 31-1(2) of the WET Act provides that wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol.

Each of the products set out in subsection 31-1 of the WET Act is separately defined in the WET Act.

Of relevance in this case, section 31-3 of the WET Act and Regulation 31-3.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations) provide that a 'grape wine product' is a beverage that meets all of the following requirements:

(a) must only be used to extract flavours from vegetable matter; and

(b) must be essential to the extraction process; and

(c) must not add more than one percentage point to the strength of alcohol by volume of the beverage;

Product One & Two:

You have advised that the combination of the following ingredients is required to produce 1000 litres of your Product One:

You have advised that the combination of the following ingredients is required to produce 1000 litres of your Product two:

Subsection 31-2(1) of the WET Act and regulation 31-2.01 of the WET Regulations provide that grape wine is a beverage that:

Subsection 31-2(2) of the WET Act goes on to provide that a beverage does not cease to be the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes merely because grape spirit, brandy or both grape spirit and brandy, have been added to it.

However, a beverage will cease to be the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes where it is subjected to a further process such as distillation.

You have advised that both products comprised of % grape wine. Therefore, on the facts provided, both products meet the first requirement to be classified as a grape wine product.

Section 31-3 of the WET Act provides that a beverage must contain at least 700ml of grape wine per litre (70%) before it will qualify as a grape wine product.

Section 31-3 of the WET Act and regulation 31-3.01 of the WET Regulations also require that that ethyl alcohol cannot be added unless it is derived from grape spirit or alcohol used in preparing vegetable extracts. You have advised that your recipe for both products contain non-alcoholic flavours that are free of any ethanol. Based on the new facts provided, both products meet the requirements in subsection 31-3(a) and 31-3(d) for a grape wine product.

Lastly, a grape wine product is accepted as being a wine provided that the alcoholic strength is more than X% alcohol by volume (av) and not more than Y% av. Both your products will have a final alcoholic strength within this range which fulfils the definition of grape wine under section 31-2 of the WET Act.

According to the information provided, your products meet the definition of grape wine product for the purposes of the WET Act.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).