Edited version of private advice

Authorisation Number: 1051924756182

Date of advice: 23 November 2021

Ruling

Subject: WET - product classification

Question

Does your product meet the definition of 'grape wine product' as defined in section 31-3 of the WET Act?

Answer

Yes, your product meets the definition of 'grape wine product' as defined in section 31-3 of the WET Act.

This ruling applies for the following period:

XX Month 20XX to XX Month 20XX

The scheme commences on:

XX Month 20XX

Relevant facts and circumstances

You plan on manufacturing an alcoholic beverage in a variety of flavours (your product).

Your product will consist of at least 700 millilitres of 'grape wine' per litre that meets the definition found in section 31-2 of the WET Act.

Your product will contain further ingredients that do not contain any ethyl alcohol, nor would be considered a flavour of an alcoholic beverage other than wine.

Your product will have an alcoholic content of at least 8% alcohol by volume, but no more that 22%.

Relevant legislative provisions

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

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

A New Tax System (Wine Equalisation Tax) Regulations 2019 Subdivision 31-A

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, and

•                    sake.

However, wine does not include beverages that do not contain more than 1.15% by volume of ethyl alcohol.

All 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 section 31-3.01 of the A New Tax System (Wine Equalisation Tax) Regulations 2019 (WET Regulations).

Considering the requirements of both the WET Act and WET Regulations, a 'grape wine product' is a beverage that:

•                    contains at least 700 millilitres of grape wine per litre

•                    has not had added to it, at any time, any ethyl alcohol from any other source, except:

-              grape spirit, or

-              alcohol used in preparing vegetable extracts (including spices, herbs, and grasses) where the alcohol:

o        is only used to extract flavours from vegetable matter

o        is essential to the extraction process, and

o        adds no more than one percentage point to the overall alcoholic strength by volume of the beverage

•                    contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol, and

•                    has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial.

To determine whether your product is a 'grape wine product', each criterion of the definition needs to be considered.

Contains at least 700 millilitres of grape wine per litre

Subsection 31-2 of the WET Act and section 31-2.01 of the WET Regulations provide that 'grape wine' is a beverage that:

•                    is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes, and

•                    contains not more than 22% by volume of ethyl alcohol.

The base wine which forms the base of your product meets the definition of 'grape wine' because it is the product of the complete or partial fermentation of fresh grapes and does not contain more that 22% by volume of alcohol.

As your product will contain at least 700 millilitres by volume of base grape wine, this criterion is satisfied.

Has not had added to it, at any time, any ethyl alcohol from any other source

Your product has not had added to it, any time, any ethyl alcohol from any other source. Therefore, this criterion is satisfied.

Contains at least 8% by volume of ethyl alcohol, but not more than 22% by volume of ethyl alcohol

The final alcohol strength of your product will contain at least 8% alcohol by volume, but no more that 22%. Therefore, this criterion is satisfied.

Has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial

The Commissioner's view in Wine Equalisation Tax Ruling WETR 2009/1: The operation of the wine equalisation tax system is that:

... the preclusion of the addition of the 'flavour of any other 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. We also consider that the way in which the product is named and marketed will have an impact on (but will not be determinative of) whether the beverage has had added to it flavours designed to mimic the taste of a beverage other than wine and, therefore, whether it will meet the definition of a grape wine product.[1]

None of the ingredients in your product, individually or combined, would be considered 'the flavour of an alcoholic beverage other than wine'. Further, the ingredients, when coupled with the intended name and marketing for your product, do not indicate that your product intends to mimic an alcoholic beverage other than wine. Therefore, this criterion is satisfied.

Conclusion

Your product satisfies all the criteria within the definition of 'grape wine product' in section 31-3 of the WET Act and section 31-3.01 of the WET Regulations and would therefore be considered a 'grape wine product'.

[1] At paragraph 16C