Edited version of private advice

Authorisation Number: 1052110578171

Date of advice: 8 August 2023

Ruling

Subject: Wine equalisation tax

Question

Does your product meet the definition of "grape wine" as defined in section 31-2 of A New Tax System (Wine Equalisation Tax) Act 1999 and section 31-2.01 of A New Tax System (Wine Equalisation Tax) Regulations 2019?

Answer

Yes.

This ruling applies for the following period:

8 August 2023 to 7 August 2027

The scheme commences on:

8 August 2023

Relevant facts and circumstances

1.      You intend to manufacture a beverage as specified in paragraphs 2 to 7 below (your beverage).

2.      Fresh grapes will be crushed to produce grape juice.

3.      The grape juice will be subject to evaporation by heat treatment until it becomes a concentrated juice solution.

4.      The grape juice concentrate will be placed in cold storage until needed.

5.      As part of the fermentation process the following processes will occur:

a.      Grape juice concentrate will be added to water.

b.      Yeast and other ingredients will be added to convert the natural grape sugars into alcohol.

6.      Neutral grape spirit will then be used to fortify the product.

7.      The final beverage will have an alcoholic content of no more than 22% alcohol by volume (abv).

Relevant legislative provisions

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

A New Tax System (Wine Equalisation Tax) Regulations 2019, section 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.

Section 31-1 within subdivision 31-A provides the meaning of 'wine', which includes 'grape wine'.

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

Grape wine

The definition of 'grape wine' is contained in section 31-2 of the WET Act. The definition states that '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.

Subsection 31-2(2) of the WET Act states that 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.

Subparagraph 31-2(1)(b) of the WET Act refers to the requirements contained in section 31-2.01 of the WET Regulations. The section stipulates that 'grape wine' must not contain more than 22% by volume of ethyl alcohol.

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 whether the finished product is 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. We consider that your finished product is a beverage.

Product of the complete or partial fermentation of fresh grapes or 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.

Additives and processing aids will be added to convert the natural grape sugars into alcohol, 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 alcoholic strength of the product will be no more than 22%. Therefore, your product will fall within the acceptable range for a grape wine.

Addition of grape spirit

Your product will be fortified using a neutral grape spirit. As the definition of grape wine allows for the addition of grape spirit, your product will 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 section 31-2.01 of the WET Regulations. Therefore, your product will be considered a 'grape wine'.