Edited version of your private ruling

Authorisation Number: 1012446634784

Ruling

Subject: Brewery refund scheme

Question 1

Can you and Company B be considered to be one entity, operating one brewery, for the purposes of an excise duty refund under the brewery refund scheme?

Answer

No

This ruling applies for the following periods:

From 1 July 2012

The scheme commences on:

Unknown

Relevant facts and circumstances

You hold a manufacturer licence to manufacture beer.

Records you have provided show that Company B also holds a manufacturer licence to manufacture beer.

You and Company B have different Australian business numbers and tax file numbers.

You state that you are completely self-sufficient and self-funded.

You state that you and Company B have different customers and therefore have no common flow of profit.

Shareholders and administration and management staff are shared between you and Company B.

Relevant legislative provisions

Excise Act 1901 Section 4

Excise Act 1901 Section 6A

Excise Act 1901 Section 39A

Excise Act 1901 Section 77A

Excise Act 1901 Section 78

Excise Regulations 1925 Regulation 3

Excise Regulations 1925 Regulation 50

Excise Amendment Regulations 2012 (No. 3)

Excise Amendment Regulations 2012 (No. 3) Explanatory Statement

Reasons for decision

Section 78 of the Excise Act 1901 (Excise Act) provides that a refund of excise duty may be allowed in prescribed circumstances. The prescribed circumstance at paragraph 50(1)(zzd) of the Excise Regulations 1925 (Excise Regulations) includes:

excise duty has been paid on beer that is manufactured in an eligible brewery during a financial year starting on or after 1 July 2012, ...

Paragraph 50(1)(zzd) was amended by the Excise Amendment Regulations 2012 (No. 3) (Excise Amendment Regulation).

The Explanatory Statement to the Excise Amendment Regulation states that the Excise Amendment Regulation expands the previous excise refund scheme, now allowing an eligible brewery to claim a refund of 60% of the excise duty it paid on beer on or after 1 July 2012, up to a maximum of $30,000 per financial year.

The meaning of the term 'eligible brewery' is given in regulation 3 of the Excise Regulations. Paragraph 3(a) of the Excise Regulations states:

    An eligible brewery is a brewery that:

(a) is operated by an entity that is legally and economically independent of any other entity that operates a brewery; and

(b) sells beer (whether wholesale or retail), on which excise has been paid, directly from the manufacturing premises of the brewery.

Meaning of the term 'entity' for the purposes of the Excise Act

To manufacture alcoholic beverages (other than wine) you must hold an excise manufacturer licence. Section 39A of the Excise Act does not specify what types of entities are entitled to hold an excise licence.

Section 4 of the Excise Act however states that a licensed manufacturer is a 'person' or 'partnership' who holds a manufacturer licence. Section 6A of the Excise Act states that the Excise Act applies to a partnership as if the partnership were also a person.

As the rights and duties under the Excise Act are imposed on a 'person', the Commissioner considers that a 'person' is entitled to hold an excise licence, including an excise manufacturer licence.

The term 'person' refers to an entity that has rights and obligations before the law. Such an entity can hold property in its own right, independently enter into legal contracts, sue and also be sued. Not all entities however are considered to be persons that have rights and obligations before the law. For example, unincorporated bodies do not have a legal identity separate from the individuals (persons) that comprise them.

For the purposes of the Excise Act, the term 'person' is therefore a reference to an entity that exists as a separate legal entity. It is only these entities that are entitled to hold an excise licence.

You hold a manufacturer licence to manufacture beer. Records you have provided show that Company B also holds a manufacturer licence to manufacture beer. Further, you and Company B have different Australian business numbers and tax file numbers.

Taking into account the above, the Commissioner is of the view that you and Company B are separate legal entities. Therefore, you and Company B are not considered to be one entity (or one person) for the purposes of the brewery refund scheme.

Meaning of the term 'brewery' for the purposes of the Excise Act

The term 'brewery' is defined in section 77A of the Excise Act as, a factory in respect of which a person is licensed to manufacture beer. The term factory is further defined in section 4 of the Excise Act as, the premises on which any person is licensed to manufacture excisable goods, and includes all adjoining premises used in connection therewith or with the business of the licensed manufacturer.

You are a brewery because you are licensed to manufacture beer, an excisable good. Company B is a brewery as it is also licensed to manufacturer beer.

There are therefore two different breweries, as each is a factory with a separate licence to manufacture beer.

As such, the two breweries cannot be considered to be one brewery for the purposes of the brewery refund scheme.

Subsequently, you and Company B cannot be considered as one entity, operating one brewery, for the purposes of an excise duty refund under the brewery refund scheme.