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Edited version of your written advice
Authorisation Number: 1012708436880
Ruling
Subject: Definition of wine
Question 1
Is your product a 'grape wine product' and therefore subject to wine equalisation tax (WET)?
Answer
No. Your product is not a grape wine product and is subject to excise duty rather than WET.
This ruling applies for the following periods:
1 July 2014 onwards
The scheme commences on:
1 July 2014
Relevant facts and circumstances
Less than 70% of your product is comprised of grape wine (containing between 13%-15% Alcohol/Volume), grape spirit such as brandy, and fruit juices including grape juice. The remainder comprises other essences (that do not contain alcohol) and water.
Your product does not contain any preservatives and once blended the product is treated to obtain a 6 month self-life.
Your end product has an alcoholic content less than 8% Alcohol/Volume.
There are no other spirits or ingredients that contain alcohol as part of the ingredients.
Relevant legislative provisions
A New Tax System (Wine Equalisation Tax) Act 1999
Section 31-3
A New Tax System (Wine Equalisation Tax) Regulations 2000
Regulation 31-3.01
Excise Tariff Act 1921
Schedule 1
Reasons for decision
A product will be subject to WET if it meets one of the definitions set out in Subdivision 31-A of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act).
Of relevance for your grape wine based product is the definition of 'grape wine product' set out in section 31-3 of the WET Act, which provides that (emphasis added):
Grape wine product is a beverage that:
(a) contains at least 700 millilitres of *grape wine per litre; and
(b) has not had added to it, at any time, any ethyl alcohol from any other source, except:
(i) grape spirit; or
(ii) alcohol used in preparing vegetable extracts (including spices, herbs and grasses); and
(c) contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol; and
(d) complies with any requirements of the regulations, made for the purposes of section 31-8, relating to grape wine products.
Regulation 31-3.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2000 provides that a grape wine product must not have added to it at any time the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial.
Additionally, where any ethyl alcohol (other than grape spirit) is added to a grape wine product it must only be used to extract flavour from vegetable matter, it must be essential to the extraction process and cannot add more than one percentage point to the alcoholic strength of the beverage.
The Commissioner's interpretation of this provision is set out in paragraphs 13 to 22 of Wine Equalisation Tax Ruling WETR 2009/1 - Wine equalisation tax: the operation of the wine equalisation tax system. As stated in paragraph 16, the definition of grape wine products includes a minimum and maximum alcohol band to prevent low strength spirits from accessing the WET.
Your grape wine based product contains less than 70% grape wine, grape spirits and grape juices and has a final alcoholic content less than 8% Alcohol/Volume.
Your grape wine product does not meet the requirement in the WET Act that a grape wine product must contain at least 700 millilitres of grape wine per litre (i.e. 70%).
Additionally, your end product contains less than 8% alcohol/volume and therefore, does not meet the requirement in the WET Act that a grape wine product must contain at least 8% by volume of ethyl alcohol.
Your grape wine based product falls outside the definition of 'grape wine product' and none of the other definitions in Subdivision 31-A of the WET Act apply. Therefore, your grape wine based product is not 'wine' and is not subject to WET.
Instead, your grape wine based product is classifiable to Item 2 of the Schedule to the Excise Tariff Act 1921 as 'other excisable beverages not exceeding 10% by volume of alcohol' and is subject to excise duty.
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