Edited version of private ruling

Authorisation Number: 1011786239766

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Ruling

Subject: WET - classification of product.

Question

Does your product qualify as 'wine' for the purposes of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) and thus be subject to WET?

Answer

Yes, your product will be subject to WET as it qualifies as a 'grape wine product' for the purposes of the WET Act.

Relevant facts and circumstances

You intend to produce a grape wine based product which will have 8% alcohol by volume (a/v).

You further clarified that your product contains the following ingredients:

§ Wine

§ Fruit Juice

§ Fruit flavour

§ Herb flavour

§ Herb Emulsion

§ (Both the flavours and the Emulsion are .0028% of the total volume of the product)

§ Carbonation

§ A/c level is 8%

In a telephone conversation you also stated that:

§ in every 100 litres there is more than 70 litres of wine

§ the wine has an a/c by v/v of 10%

§ as the alcohol content is 10%, to bring it down to 8% you add fruit juice. The fruit juice is a concentrate and to dilute it, you add fruit flavour, herb flavour and herb emulsion

§ you also add wine water

§ the above additions reduce the alcohol percentage from 10% to 8%.

§ the raw grape juice concentre has no alcohol added to it. It is comprised of sugar. The addition of flavours and water has the effect of reducing the sweetness of the wine.

§ you used the Pearson Square to work out the percentage of alcohol.

You further advised that you test the wine for alcohol content/percentage before bottling and after it has been bottled and make any adjustments as required to ensure that it conforms to the 8% alcohol content.

Relevant legislative provisions

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 5-5

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 33-1

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

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

A New Tax System (Wine Equalisation Tax) Act 1999 - Subsection 31-1(2)

A New Tax System (Wine Equalisation Tax) Act 1999 - Section 31-2

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

Reasons for decision

These reasons for decision accompany the Notice of private ruling.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Summary

Your product is a grape wine product and consequently subject to WET, provided it meets the requirements as set out in section 31-3 of the WET Act and the WET Regulations.

Detailed reasoning

Section 5-5 of the WET Act imposes a liability to WET on specific dealings with wine.
Wine is defined in section 33-1 of the WET Act as having the meaning given by Subdivision 31-A.

Subsection 31-1(1) in Subdivision 31-A states that wine means any of the following:

§ Grape wine

§ Grape wine products

§ Fruit or vegetable wines

§ Cider or perry

§ Mead

§ Sake.

Each of the above are further defined in the WET Act. Having regard to these definitions, because of its ingredients, your product falls for consideration as a grape wine product under section 31-3 of the WET Act, for the reasons explained below.

Section 31-3 of the WET Act defines grape wine product as follows:

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.

Therefore, in order to determine if your product is a grape wine product, we first have to consider whether your product meets the requirements of containing at least 70% grape wine per litre.

Section 31-2 of the WET Act defines grape wine as follows:

(1) Grape wine 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) complies with any requirements of the regulations, made for the purpose of section 31-8, relating to grape wine.

Subsection 31-1(2) of the WET Act stipulates that to be covered by the WET legislation, beverages must contain more than 1.15% by volume of ethyl alcohol. Regulation 31-3.01 of the
A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations) further stipulates that grape wine must not contain more than 22% a/v.

The primary statement in the definition of grape wine is that it is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes. If the beverage is not the product of the complete or partial fermentation of fresh grapes or the complete or partial fermentation of products derived solely from fresh grapes, then the beverage is not grape wine.

You have advised that your product will contain more than 70% wine which has 10% a/v. This wine is the product of the complete or partial fermentation of grapes and contains 10% a/v, therefore it satisfies the requirements of section 31-2 of the WET Act and the requirements in the WET Regulations. Further paragraph 12 of Wine Equalisation Tax Ruling WETR 2009/1-
Wine equalisation tax: the operation of the wine equalisation tax system, provides that the wine you are using is a table wine and falls within the definition of grape wine.

Having determined that the main ingredient in your is grape wine, we now need to consider whether your product meets the other requirements to qualify as a grape wine product in section 31-3 of the WET Act.

The information you have provided for your product shows that:

§ it contains more than 700 millilitres of grape wine per litre,

§ the other ingredients do not contain any alcohol,

§ the end product will contain at least 8% alcohol and not more than 22% by volume of
ethyl alcohol, and

§ the requirements of the WET Regulations are met as the only flavours added are non-alcoholic fruit and vegetable flavours. None of the flavours added add the flavour of an alcoholic beverage.

Therefore, as your product will contain more than 70% grape wine, will not have added to it the flavour of an alcoholic beverage or any other ethyl alcohol, and will have 8% a/v, it meets the definition of a grape wine product under section 31-3 of the WET Act and will be subject to WET.