1012624617341 | Legal database

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Edited version of private advice

Authorisation Number: 1012624617341

Ruling

Subject: GST, WET and Excise Product Classification

Issue 1

Alcohol tax

Question 1

Are your products classified as 'wine' under Subdivision 31-A of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) and therefore subject to WET when sold to your customers?

Answer

Question 2

Will your products be subject to excise duty under the Excise Tariff Act 1921 (Excise Tariff Act)?

Answer

Issue 2

Goods and services tax (GST)

Question 3

If you are not registered or not required to be registered for goods and services tax (GST), will your products be subject to GST when sold to your customers?

Answer

Question 4

If you are registered or are required to be registered for GST, will your products be subject to GST when sold to your customers?

Answer

Yes

This ruling applies for the following periods:

2014 onwards

Relevant facts and circumstances

• You intend to sell products in a solid form.

• You are yet to commence your business.

• You are currently not registered for GST but you intend to register for GST at a later date.

• You anticipate that your turnover will be less than $75,000 per financial year for your first year of operation.

• You will import your products and sell them online in Australia.

• Your products will not contain ethyl alcohol.

• Your customers will add ethyl alcohol to your products to produce beverages.

• Your products include a number of varieties

Relevant legislative provisions

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

Excise Tariff Act 1921 The Schedule

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5, Division 23, Division 38, Division 40

Reasons for decision

Issue 1

Question 1

Summary

No, your products will not be subject to WET when sold to your customers.

Detailed reasoning

Wine is defined in section 31-1 of the WET Act as meaning, grape wine, grape wine products, fruit or vegetable wine, cider or perry, mead and sake and does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol. If a beverage meets the definition of wine and is subject to a taxable dealing, the wine will subject to WET.

The term 'beverage' is not defined in the WET Act. A beverage, by its ordinary meaning, is a drink of any kind, being any liquid which is swallowed to quench thirst or for nourishment.

As your products are in solid form, they are not liquids that can be swallowed to quench thirst or for nourishment. Your products are therefore not considered to be beverages.

Furthermore, your products do not contain any ethyl alcohol.

As such, your products are not wine and will therefore not be subject to WET when sold to your customers.

Question 2

Summary

No, your products will not be subject to excise duty.

Detailed reasoning

The Schedule to the Excise Tariff Act includes a table that lists all of the goods that are subject to excise duty (if those goods are manufactured in Australia). These excisable goods fall into three broad groups:

• Alcoholic beverages

• Cigarettes and tobacco products, and

• Fuel and oils.

As stated earlier, your products are not beverages, nor do they contain alcohol. They are also not cigarettes, tobacco products, fuel or oil. Furthermore, your products are imported and are not manufactured in Australia.

Your products are therefore not goods that are listed in the Schedule to the Excise Tariff Act and will therefore not be subject to excise duty.

Issue 2

Question 3

Summary

No, your products will not be subject to GST when you are not registered or required to be registered for GST and they are sold to your customers.

Detailed reasoning

GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. GST will only apply if the entity providing the service or selling goods and other items are either registered for GST or are required to be registered for GST.

Under Division 23 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you are required to be registered for GST if you run a business or enterprise and your GST turnover is $75,000 or more ($150,000 or more for non-profit organisations).

If your GST turnover is below the threshold, registering for GST is optional. If you choose to register for GST, you generally must stay registered for at least 12 months.

As you are not required to be registered for GST and should you choose not to register for GST, your products will not be subject to GST when sold to your customers.

Question 4

Summary

Yes, your products will be subject to GST when you are registered or required to be registered for GST and they are sold to your customers.

Detailed reasoning

You will have a liability for GST where you make a 'taxable supply' to your customers. Section 9-5 of the GST Act provides that you will make a taxable supply where:

• you make the supply for consideration

• the supply is made in the course or furtherance of an enterprise you carry on

• the supply is connected with Australia; and

• you are registered or required to be registered for GST.

The supply will not be a taxable supply to the extent that it is GST-free or input taxed.

The supply of the products is not a GST-free supply under Division 38 of the GST Act, and is not an input taxed supply under Division 40 of the GST Act. Therefore, if you are required to be registered for GST or choose to register for GST, you will make a taxable supply of the products when you sell them to your customers, and you will be liable for GST at the rate of 10% of the value of the supply.

It is your responsibility to register for GST if your turnover exceeds the relevant threshold or is likely to exceed it in the next 12 months. You must register within 21 days of reaching the threshold.

If you choose to register for GST, you generally must stay registered for at least 12 months.

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