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Edited version of your written advice
Authorisation Number: 1012990527812
Date of advice: 31 March 2016
Ruling
Subject: Classification of sangria products
Question 1
Are your sangria products subject to Wine Equalisation Tax (WET)?
Answer
Yes, your sangria products are subject to WET.
This ruling applies for the following periods:
1July 2015 - 30June 2018
The scheme commences on:
1 July 2015
Relevant facts and circumstances
1. You are registered for goods and services tax (GST).
2. You plan to produce sangria products.
3. Your products will contain more than 700 millilitres per litre of fortified grape wine.
4. Your products will also contain artificial fruit flavouring and lemon juice.
5. The artificial fruit flavour will not contain any ethyl alcohol, but may contain propylene glycol or decyl aldehyde. The molecular formula for each chemical compound was provided.
6. Both sangria products will contain more than 8% and less than 22% by volume of ethyl alcohol.
Relevant legislative provisions
A New Tax System (Wine Equalisation Tax) Act 1999 Subdivision 31-A and
A New Tax System (Wine Equalisation Tax) Act 1999 Subsection 31-3.
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.
Section 31-1 in Subdivision 31-A of the WET Act provides that wine means any of the following:
• grape wine;
• grape wine products;
• fruit or vegetable wine;
• cider or perry;
• mead;
• sake.
However, wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol. All of the beverages set out above are separately defined for the purposes of the WET Act and, of these definitions; 'grape wine product' is the most relevant in your circumstances.
Grape Wine Product
Grape wine product is defined in section 31-3 of the WET Act. It is also subject to certain requirements as specified in regulation 31-3.01 of the WET Regulations.
A grape wine product, taking into account the requirements of both the WET Act and the WET Regulations, 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) has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial.
Contains at least 700 millilitres of grape wine per litre
Grape wine, taking into account both Section 31-2 of the WET Act and WET Regulation 31-2.01, 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) contains not more than 22% by volume of ethyl alcohol.
A beverage does not cease to be a grape wine where grape spirit, brandy or both grape spirit and brandy have been added.
The sweet fortified wine you intend to use in your products meets the definition of 'grape wine' under the WET Act and WET regulations.
Further, your sangria products will contain more than 700 millilitres of grape wine per litre of sangria.
Has not had added to it, at any time, any ethyl alcohol from any other source
You intend to use fruit flavours in your products. The fruit flavours will not contain ethyl alcohol, but may contain propylene glycol and decyl aldehyde.
Apart from a substance that adds the flavour of an alcoholic beverage other than wine, it is evident from the definition of 'grape wine product' that ethyl alcohol (other than ethyl alcohol derived from grape spirit or ethyl alcohol used in preparing vegetable extracts) is the only substance which, when added to a beverage, precludes the beverage from satisfying the requirements for a 'grape wine product'.
Propylene glycol and decyl aldehyde each have a different chemical formula from ethyl alcohol. The chemical formula for each chemical compounds was provided
It follows that propylene glycol and decyl aldehyde may be added to a beverage without the beverage being precluded from satisfying the definition of 'grape wine product'.
Contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol
The final alcoholic strength of each sangria product will be more than 8% and less than 22% alcohol by volume. This falls within the acceptable range for a grape wine product.
Has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial.
None of the ingredients would be considered on their own or in combination to constitute the addition of the flavour of an alcoholic beverage.
Therefore, your products meet the definition of a 'grape wine product' and are subject to WET.