Edited version of your written advice

Authorisation Number: 1051405873386

Date of advice: 26 July 2018

Ruling

Subject: Product Classification

Question

Does your product meet the definition of ‘grape wine’ as defined in section 31-2 of the A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act)?

Answer

Yes, your product will meet the definition of ‘grape wine’ as defined in section 31-2 of the WET Act.

This ruling applies for the following period:

1 July 2018 to 30 June 2022

The scheme commences on:

1 July 2018

Relevant facts and circumstances

1. You intend to manufacture a product as specified in paragraphs 2 to 9 below (your product).

2. 100% fresh grapes will be crushed into grape juice (grape juice). No other ingredients will be added to or other processes undertaken to this grape juice.

3. The grape juice will be subject to evaporation by heat treatment until it becomes a concentrated juice solution. No other ingredients will be added or other processes undertaken. The resulting product from this evaporation process will be referred to as grape juice concentrate.

4. Both the grape juice and grape juice concentrate will be placed in cold storage until they are needed.

5. A fermentation process will occur resulting in a ‘Product”.

6. Following fermentation, the “Product” will be filtered.

7. Grape spirit will then be used to fortify the product until it has reached an alcoholic strength of X% abv.

8. No other ingredients will be added to or processes undertaken on the product following fortification.

9. The final product will have an alcoholic content of X% 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’ is the only one that is relevant in your circumstances.

Grape Wine

‘Grape wine’ is defined in section 31-2 of the WET Act. It is also subject to certain requirements as specified in regulation 31-2.01 of A New Tax System (Wine Equalisation Tax) Regulations 2000 (WET Regulations).

Grape wine, taking into account the requirements of both the WET Act and 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) does not contain more than 22% by volume of ethyl alcohol.

Additionally, 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.

Beverage

Per paragraphs 40 and 41 of Wine Equalisation Tax Ruling 2009/1 Wine equalisation tax: the operation of the wine equalisation tax system (WETR 2009/1), when determining whether a beverage is ‘wine’, consideration should be given to the finished product intended and suitable for consumption, and not the liquid that exists during the stages of production (i.e. consideration should be given to the finished wine and not to the raw wine).

Your product will undergo various stages of production before the final product intended for consumption is produced. When considering whether your product is a ‘grape wine’, the product definition explained below has only been applied to your final product and not to the various forms of raw wine (e.g. grape juice, grape juice concentrate, and Product) that exist during production. We consider that your finished product is a beverage, as it is a drink which can be consumed through a glass in accordance with paragraphs 38 and 39 of WETR 2009/1.

Product of the complete or partial fermentation of products derived solely from fresh grapes

The main ingredient to be fermented in your product is reconstituted grape juice concentrate. The grape juice concentrate used in your product will be produced through the evaporation of grape juice, which will be made from 100% fresh grapes with no other ingredients added. The grape juice concentrate will then be reconstituted using water.

Other ingredients will be added to convert the natural grape sugars into alcohol, however these substances are merely processing aids and additives, and do not prevent your product from being regarded as the product of the complete or partial fermentation of products derived solely from fresh grapes. Based on this, your product will satisfy this element of the definition.

Contains no more than 22% by volume of ethyl alcohol

The final alcohol strength of the product will be X% abv, therefore your product will fall within the acceptable range for a grape wine.

Addition of grape spirit

Your product will be fortified using a grape spirit. As the definition of a grape wine allows for the addition of grape spirit, your product will still comply with this aspect of the definition of grape wine.

Conclusion

Based on the above, your product will satisfy all the relevant paragraphs within the definition of ‘grape wine’ in section 31-2 of the WET Act and regulation 31-2.01 in the WET Regulations. Therefore, your product will be considered a ‘grape wine’.