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Edited version of your written advice
Authorisation Number: 1012950439240
Date of advice: 5 February 2016
Ruling
Subject: Fruit or vegetable wine
Question 1
Is your product a fruit or vegetable wine for the purposes of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?
Answer
No.
Question 2
Is your product without the addition of X a fruit or vegetable wine for the purposes of the WET Act?
Answer
No.
Relevant facts and circumstances
1. You are registered for goods and services tax (GST) and the wine equalisation tax (WET).
2. You produce an alcoholic beverage product and have provided details of the ingredients and the production process.
3. The fermentable material used to make your product is comprised of Y concentrate, water and, a percentage of sugar.
4. One of the ingredients known as X, is a type of food additive used to make beverages, such as fruit juices.
5. Under current Australian New Zealand Food Regulations X is classed as a Flavour/Flavouring.
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 31-4
Reasons for decision
Summary
Your product is not wine for the purposes of the WET Act because the amount of sugar that has been added cannot be properly described as an 'additive'. Instead, it forms a significant proportion of the fermentable material and the end product cannot therefore be said be the product of the fermentation of the juice or must of fruit or vegetables.
Further the product is not wine for the purposes of the WET Act because X contains flavour and the definition of 'fruit or vegetable wine' in the WET Act provides that fruit or vegetable wine must not have added to it at any time any liquor or substance that gives colour or flavour.
In summary the product does not meet the requirements of a 'fruit or vegetable' wine or any of the other definitions in Subdivision 31-A of the WET Act, and therefore is not wine under the WET Act. The product is therefore classified as an 'other excisable beverage' under the Excise Tariff Act 1921, and subject to excise duty.
Detailed reasoning
Wine is defined in section 33-1 of the WET Act as having the meaning given by Subdivision 31-A of the WET Act.
Section 31-1 in Subdivision 31-A of the WET Act provides that wine means any of the following:
• grape wine;
• grape wine products;
• fruit or vegetable wine;
• cider or perry;
• mead;
• sake.
However, wine does not include beverages that do not contain more than % by volume of ethyl alcohol.
All of the beverages set out above are separately defined for the purposes of the WET Act and, of these definitions, 'fruit or vegetable wine' is the only definition that is relevant in these circumstances.
Fruit or vegetable wine
Fruit or vegetable wine is defined in section 31-4 of the WET Act. It is also subject to certain requirements as specified in regulation 31-4.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).
Fruit or vegetable wine, taking into account the requirements of both the WET Act and the WET Regulations, is a beverage that:
a) is the product of the complete or partial fermentation of the juice or must of:
(i) fruit or vegetables; or
(ii) products derived solely from fruit or vegetables; and
b) has not had added any ethyl alcohol from any other source except for two exceptions
c) has not had added any liquor or substance that gives colour or flavour (other than two exceptions ); and
d) contains a percentage of ethyl alcohol by volume or if exceptions has been added contains between % and % (inclusive) of ethyl alcohol by volume.
The addition of sugar to fruit wine does not constitute the addition of a flavour, and therefore does not prevent the beverage from being 'fruit or vegetable wine' as defined in section 31-4 of the WET Act in and of itself. We accept that it is common practice for sugar to be added in the ordinary course of winemaking despite not being explicitly allowed under the legislative definitions. However, the amount of sugar in your product relative to other fermentable material means that the sugar cannot be properly described as an 'additive' and the end product cannot be said to be the product of the fermentation of the juice or must of fruit or vegetables.
Notwithstanding that your products do not meet the definition of 'fruit or vegetable wine' because
they cannot be properly described as the product of the complete or partial fermentation of the juice or must of fruit, one product does not meet the definition of fruit or vegetable wine in any case. This is because X contains flavour and the definition of fruit or vegetable wine provides that for a beverage to be fruit or vegetable wine, it must not have added to it any liquor or substance that gives colour or flavour.
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