Edited version of your private ruling

Authorisation Number: 1012601700207

Ruling

Subject: WET Product Classification

Question 1

Whether your product qualifies as wine for the purposes of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act)?

Answer

Yes, your manufactured product is considered a 'grape wine' for the purposes of the WET Act.

Relevant facts and circumstances

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

You are not registered for wine equalisation tax (WET). However, you are in the process of registering for a WET role.

You account for GST on a cash method.

You intend producing a fortified wine alcoholic beverage (your product).

The wine used was produced through the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes.

The wine may be decolourised and deodorised (depending on the grape vintage).

It will then be fortified with neutral grape spirit and will have a final alcoholic strength of X%

Your product does not contain any flavours or additives other than the neutral grape spirit added to it.

We asked you for information about the final product you intend to produce. In particular, we asked for information about what the product would be called, how the product would be packaged and what it would look like, how it would be marketed and so on. Your representative advised us that they were not aware of the final marketing plan for the product.

Relevant legislative provisions

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 Paragraph 31-2(1)(a)

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

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

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

A New Tax System (Wine Equalisation Tax) Regulations 2000 Regulation 31-2.01

Reasons for decision

Wine is defined in section 33-1 of the WET Act as having the meaning given by Subdivision 31-A of the WET Act.

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

• Grape wine;

• Grape wine products;

• Fruit or vegetable wines;

• Cider or Perry;

• Mead;

• Sake.

Subsection 31-1 (2) of the WET Act provides that wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol.

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 purposes of section 31-8, relating to grape wine.

(2) A beverage does not cease to be the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes merely because grape spirit, brandy, or both grape spirit and brandy, have been added to it.

The regulations referred to in section 31-2 above are the A New Tax System (Wine Equalisation Tax) Regulations 2000. Regulation 31-2.01 relates to grape wine. It states:

For paragraph 31-8(1)(a) of the Act, a beverage mentioned in paragraph 31-2(1)(a) of the Act must not contain more than 22% by volume of ethyl alcohol.

The manufacture of your product may require white grape wine to undergo a 'process' of filtration.

The definition of 'grape wine' is silent on the processes (other than fermentation) required to make wine. Taking a narrow interpretation of the provisions, it could be said that any process (other than fermentation) is not specifically allowed. On a narrow reading of the definition, a beverage produced using the process would not meet the definition. However, taking into account the context and underlying intention of the relevant provisions, it is considered appropriate that the provision be afforded a broad interpretation.

It is acknowledged that some processes other than fermentation may be a necessary part of the traditional grape winemaking process. Such processes may include filtration. However, any such process is only accepted to the extent that the finished product retains the essential characteristics of grape wine such as the flavour and aroma compounds of grape wine.

On the basis that the said process used by you results in minimal change to the wine's colour and odour, it can be said that your product retains 'all the essential characteristics of the grape wine'.

As such, your manufactured product is regarded as a grape wine under section 31-2 of the WET Act.

We note that we have asked you for details such as the name, presentation and marketing of the final product you intend to produce. In particular, we asked for information about what the product would be called, how the product would be packaged and what it would look like, how it would be marketed and so on. This information was not provided. We have therefore made our ruling on the basis that on the information provided your product has the character of a traditional grape wine.

However, if the final characteristics of your product (packaging, marketing etc.) indicate that the final product does not have the characteristics we would expect of a traditional grape wine then you may not be able to rely on this ruling and we would recommend that you seek further advice from us.