A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 5 - Amendment of the A New Tax System (Wine Equalisation Tax) Act 1999

Outline of Chapter

5.1 This Chapter explains the amendments to the WET Act to:

allow refunds of WET to persons who are taking wine with them out of Australia as accompanied baggage; and
ensure that certain applications to own use of wine are not taxable.

Refunds of wine equalisation tax for persons leaving Australia with wine

5.2 Amendment 170 inserts Division 25 which will enable the establishment of a WET refund system similar to that available for GST on goods being taken out of Australia as accompanied baggage.

5.3 The effect of the new provision will be that if a person takes wine overseas as accompanied baggage the person may be entitled to a refund of the WET that was included in the price they paid for the wine.

5.4 Section 25-5 contains details of the requirements to be met before a refund can be paid:

the person must acquire wine on which they have borne WET and which they are exporting as accompanied baggage. Accompanied baggage are goods which a person takes with them on the aircraft or ship in which they are departing Australia;
the acquisition must be of a kind specified in the regulations; and
the person must leave Australia and export the wine from Australia as accompanied baggage, in the circumstances specified in the regulations.

5.5 If the person meets the above requirements, the Commissioner must pay the person a refund equal to the amount of the WET the person bore on the wine or some proportion of that amount specified in the regulations.

5.6 The law allows for regulations setting out the method to be used in calculating the amount of WET to be refunded.

Applications to own use

5.7 Item 171 amends the definition of 'application to own use' in section 33-1 of the WET Act by adding a further exclusion. Section 13-5 of the WET Act allows an entity to purchase wine free of WET if it will be used as a material in manufacture or other treatment or processing. This will allow, for example, a manufacturer that uses wine to produce other beverages to purchase the wine under quote, free of WET.

5.8 The WET Act imposes a WET liability on an application to own use by an entity that obtained the wine under quote. In the example in paragraph 5.7 this provision would apply and the manufacturer would have a WET liability at the time the wine is used. This amendment will ensure that when wine is used in that circumstance it will not be an application to own use and a WET liability will not arise. Any WET or GST will be payable at the time the goods produced are sold or applied to own use.

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