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Edited version of private advice

Authorisation Number: 1051570958309

Date of advice: 4 September 2019

Ruling

Subject: Product classification

Question

Does your product, meet the definition of 'grape wine product' as defined in section 31-3 of the A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act)?

Answer

No, your product does not meet the definition of 'grape wine product' as defined in section 31-3 of the WET Act.

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You plan to manufacture a product (the product).

The product will comprise of a 'base wine', sugar, flavours and additives.

The 'base wine' used in the product is a 'grape wine' according to the definition in section 31-2 of the WET Act.

The flavours and additives used do not contain any ethyl alcohol.

The product will have an alcoholic content of more than 8% alcohol by volume (abv) and less than 22% abv.

Relevant legislative provisions

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

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

Reasons for decision

'Wine' is defined in section 33-1 of the A New Tax System (Wine Equalisation Tax) Act 1999 (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 1.15% 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, 'grape wine product' is the only one that is relevant in your circumstances.

Grape Wine Product

'Grape wine product' is defined in section 31-3 of the WET Act. It is also subject to certain requirements as specified in regulation 31-3.01 of A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).

A grape wine product, taking into account the requirements of both the WET Act and WET Regulations, 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[1] (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)    has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial.

Contains at least 700 millilitres of grape wine per litre

Grape wine, taking into account both section 31-2 of the WET Act and regulation 31-2.01 of the WET Regulations, is a beverage that:

a)    is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes; and

b)    contains not more than 22% by volume of ethyl alcohol.

A product does not cease to be a grape wine merely because grape spirit, brandy or both grape spirit and brandy have been added to it.

The base wine, which forms the base of the product, will constitute more than 70% of the product, As the base wine is a 'grape wine' per the definition in section 31-2 of the WET Act and the required amount is used in the product, this requirement is satisfied.

Has not had added to it, at any time, any ethyl alcohol from any other source

Under the definition of grape wine product ethyl alcohol (other than ethyl alcohol derived from grape spirit or ethyl alcohol used in preparing vegetable extracts) cannot be added to the beverage at any time.

As the flavours used in the product do not contain ethyl alcohol, the product meets this criterion for a grape wine product.

Contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol

The final alcohol strength of the product will be more than 8% abv and less than 22% abv.

Has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial

Subregulation 31-3.01(2) of the WET Regulations requires that a grape wine product must not have added to it the flavour of any alcoholic beverage (other than wine), whether that added flavour is natural or artificial.

It is the Commissioner's view that the preclusion of the addition of the 'flavour of an alcoholic beverage' includes more than one added flavour that, when combined together, is the flavour of an alcoholic beverage (other than wine) whether such flavours are natural or artificial.[2] Whilst not a determinative factor, the way in which the product is named and marketed will also have an impact on whether the flavours added to a beverage were designed to mimic the taste of a beverage other than wine.[3]

The flavours used in the product are considered to be the flavour of an alcoholic beverage (other than wine). The combination of the flavours along with the name of the product indicates that the product was designed to mimic the taste of an alcoholic beverage other than wine. As such, this requirement is not satisfied.

Conclusion

The product 'does not satisfy all the relevant paragraphs within the definition of 'grape wine product' in section 31-3 of the WET Act and regulation 31-3.01 in the WET Regulations. Therefore, the product is not considered a 'grape wine product'.


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[1] This alcohol must only be used to extract flavours from vegetable matter, be essential to the extraction process and must not add more than one percentage point to the strength of alcohol by volume of the beverage.

[2] Wine Equalisation Tax Ruling 2009/1 (WETR 2009/1) paragraph 16C

[3] Wine Equalisation Tax Ruling 2009/1 (WETR 2009/1) paragraph 16C

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