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Edited version of your written advice
Authorisation Number: 1051366511412
Date of advice: 4 May 2018
Ruling
Subject: Product classification
Will the proposed product produced under either Option 1 or Option 2 meet the definition of ‘grape wine product’ as defined in section 31-3 of A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act)?
Answer
Yes, the proposed product made under either Option 1 or Option 2 will meet the definition of ‘grape wine product’ as defined in section 31-3 of the WET Act.
Relevant facts and circumstances
1. You intend to produce a product from a grape wine base using one of two potential recipes referred to as Option 1 and Option 2.
2. The ingredients used to manufacture the product under Option 1 and Option 2 have been provided.
3. The grape wine base satisfies the definition of ‘grape wine’ per the definition in section 31-2 of the WET Act.
4. The product resulting under both Option 1 and Option 2 will contain more than 70% of the grape wine base (i.e. 700ml of the grape wine base per litre).
5. Under both Option 1 and Option 2, the product will have ethyl alcohol added via a flavour derived from a grape spirit.
6. The final alcoholic content of the product under both Option 1 and Option 2 will be between 16% and 17% abv.
Relevant legislative provisions
A New Tax System (Wine Equalisation Tax) Act 1999 Subdivision 31-A
A New Tax System (Wine Equalisation Tax) Regulations 2000 Subdivision 31-A
Reasons for decision
‘Wine’ is defined in section 33-1 of the A New Tax System (Wine Equalisation Tax) Act 1999 (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 only one that is 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 A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).
A grape wine product, taking into account the requirements of both the WET Act and 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.
Each element of the definition will be considered in turn:
Contains at least 700 millilitres of grape wine per litre
Grape wine, taking into account both section 31-2 of the WET Act and regulation 31-2.01 of the WET Regulations, 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 no more than 22% by volume of ethyl alcohol.
A product does not cease to be a grape wine merely because grape spirit, brandy or both grape spirit and brandy have been added to it.
The grape wine, which forms the base of the product in both Option 1 and Option 2, will constitute at least 700ml per litre of the product. Therefore as the grape wine base is a ‘grape wine’ per the definition in section 31-2 of the WET Act, this requirement is satisfied for both Options.
Has not had added to it, at any time, any ethyl alcohol from any other source
From the definition of grape wine product, it is evident that ethyl alcohol (other than ethyl alcohol derived from grape spirit or ethyl alcohol used in preparing vegetable extracts) is the only alcohol which, when added to a beverage, precludes the beverage from satisfying the requirements for a grape wine product.
The addition of flavouring to the grape wine base in both Option 1 and Option 2 will add ethyl alcohol to the product. However, as the ethyl alcohol being added under both Options is derived from grape spirit, the flavouring can be added to the product without it being precluded from satisfying the definition of a ‘grape wine product’. As such, the product manufactured under both Option 1 and Option 2 meets this criterion for a grape wine product.
Contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol
The final alcohol strength of the product under both Option 1 and Option 2 will be between 16% and 17% abv. 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
Subregulation 31-3.01(2) of the WET Regulations requires that a grape wine product must not have added to it the flavour of any alcoholic beverage (other than wine), whether that added flavour is natural or artificial. It is the Commissioner’s view that the preclusion of the addition of the ‘flavour of an alcoholic beverage’ includes more than one added flavour that, when combined together, is the flavour of an alcoholic beverage (other than wine) whether such flavours are natural or artificial.
The information you provided shows that the only ingredients to be used in your products are:
● Option 1: grape wine, sugar, water, flavouring and grape spirit.
● Option 2: grape wine, sugar, flavouring and grape spirit.
For Options 1 and 2, none of these ingredients, individually or combined, would be considered to be the flavour of an alcoholic beverage (other than wine). Therefore, this condition is satisfied for both Options.
Conclusion
The product to be made using either the Option 1 or Option 2 recipe satisfies all of the elements within the definition of ‘grape wine product’ in section 31-3 of the WET Act and regulation 31-3.01 in the WET Regulations. Therefore, where the product is made under either Option, it would be considered a ‘grape wine product’.