Edited version of your private ruling

Authorisation Number: 1012473762317

Ruling

Subject: WET - Product Classification

Question 1

Is your product one a fruit or vegetable wine for the purpose of section 31-4 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?

Answer

Yes

Question 2

Is your product two a fruit or vegetable wine for the purpose of section 31-4 of the WET Act?

Answer

Yes

Question 2

Is your product three a fruit or vegetable wine for the purpose of section 31-4 of the WET Act?

Answer

No

Relevant facts and circumstances

· You are registered for goods and services tax (GST).

· You account for GST using the accrual basis method.

· You are fruit wine makers who do not add any flavours or colours to your wines.

· You use traditional winemaking techniques.

· You intend to manufacture X alcoholic products blended with product one:

· The following recipes and methods used for each product is describe below:

Product One

a) Fruit crushed and pressed and the raw juice is transported to a winery tanker

b) Sugar is added to the juice

c) A commercial yeast is added and the juice is allowed to ferment until the sugar is converted to alcohol

d) The final alcohol by volume (ABV) is approximately x%

e) This product is stored until the next process (blending)

Product Two

a) Ingredients one & two are crushed and pumped into an open fermenter tank

b) The must is inoculated with commercial yeast and allowed for ferment for a number of days

c) The must is pressed and sugar is added to the juice

d) The juice is then allowed to ferment until all the sugar is converted to alcohol

e) Sugar is added according to taste

a) The blended product is then filtered and bottled

b) The final product will have an alcohol strength of x% ABV or greater

Product Three

a) Ingredients one and two are crushed and pumped into an open fermenter tank

b) The must is inoculated with commercial yeast and allowed for ferment for a number of days

c) The must is pressed and sugar is added to the juice

d) The juice is then allowed to ferment until all the sugar is converted to alcohol

e) Sugar is added according to taste

c) The blended product is then filtered and bottled

d) The final product will have an alcohol strength of x% ABV or greater

Relevant legislative provisions

A New Tax System (Wine Equalisation Tax) Act 1999

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 - Subsection 31-4

Reasons for decision

Question 1

Your product one is a fruit or vegetable wine for the purpose of section 31-4 of the WET Act.

Question 2

Your product two is a fruit or vegetable wine for the purpose of section 31-4 of the WET Act.

Question 3

Your product three is not a fruit or vegetable wine for the purpose of section 31-4 of the WET Act.

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 defines that wine means any of the following:

· grape wine;

· grape wine product;

· fruit or vegetable wine;

· cider or perry;

· mead;

· sake,

provided they contain more than 1.15% by volume of ethyl alcohol.

These beverages are further defined in the WET Act. Having regard to these definitions, your products all fall for consideration under 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 grape spirit or neutral spirit; and

c)      has not had added any liquor or substance that gives colour or flavour (other than grape spirit or neutral spirit); and

d) contains between 8% and 22% (inclusive) of ethyl alcohol by volume or if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume.

Product One

A main ingredient used in both blended products is fruit wine. The fruit wine is manufactured by fermenting apple juice and sugar, resulting in a final beverage of approximately x% ABV. The Commissioner does not consider that sugar is a substance that adds flavour and no other substance that gives colour of flavour is added to the fermented fruit juice.

Therefore the fruit wine meets the definition of fruit or vegetable wine for the purposes of the WET Act.

Product Two

In order to address this product we need to understand the ingredients and whether or not it is considered a fruit, vegetable or something other.

Product Two is manufactured by crushing two ingredients together while adding sugar to the juice. The crushing of ingredient one results in the juice or must being formed, as with the crushing the second ingredient. The product is then fermented for a number of days to convert the sugar into alcohol. After the required period of fermentation, it is then blended with Product One resulting in a final beverage of greater than x% ABV.

The product therefore meets the overarching requirement of the definition that it be a product of the complete or partial fermentation of the juice or must of fruit or vegetables.

As with the 'fruit wine', the Commissioner does not consider that sugar is a substance that adds flavour and no other substance that gives colour of flavour is added to the fermented Product Two juice. Therefore, the blended Product Two meets the definition of fruit or vegetable wine for the purposes of the WET Act.

Product Three

Product Three is manufactured by crushing two ingredients together while adding sugar to the juice. The product is then fermented for a number of days to convert the sugar into alcohol. After the required period of fermentation, it is then blended with Product One resulting in a final beverage of greater than x% ABV.

We need to consider whether the product meets the overarching requirement that it be a product of the complete or partial fermentation of the juice or must of fruit or vegetables.

Unlike Product Two, Product Three does not result in juice or must being formed, which is required to be completely or partially fermented.

Therefore, the inclusion of the ingredients does not fall to consideration as the product of the complete or partial fermentation of the juice or must of:

· fruit or vegetables; or

· products derived solely from fruit or vegetables

As the definition requires that the beverage has not had added to it, at any time, any liquor or substance that give colour or flavour, the blended product does not meet the requirements for a fruit or vegetable wine under the WET Act.

The blended product is therefore an 'other excisable beverage' under the Excise Tariff Act 1921.