A policy change that many small brewers have called for over many years is set to become a reality with the federal government today announcing the excise refund cap for breweries and distilleries will increase from $100,000 to $350,000 from July 1, 2021.
The announcement in a joint statement by Federal Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar ahead of the federal budget, due later this month, said small brewers and distillers would benefit from $255 million in tax relief to supports jobs and investment.
"Under our plan to support jobs in this growing sector, small brewers and distillers will benefit from a tripling of the excise refund cap for small brewers and distillers from $100,000 to $350,000 per year," the joint media release said.
The Independent Brewers Association (IBA) has long called for the rebate scheme for brewers to increase so the beer industry was in line with the Wine Equalisation Tax (WET) Producer Rebate, which is capped at $350,000 per financial year. In a separate statement, the IBA called the change a "win for indie brewers" – IBA chair and founder of Wayward Brewing, Peter Philip, said it would allow small brewers to invest more in people, equipment and facilities to meet growing demand.
"Today’s investment from the Morrison government is helping to rebuild an Australian-owned beer industry that will turbo-charge growth and deliver skilled jobs in family-owned, independent breweries around the country,” Peter said in a statement.
“The Australian beer industry will do in the next 20 years what the wine industry did for Australia in the 1980s, and the Morrison government should be congratulated for their vision in helping enable this.”
The federal government previously increased the excise tax rebate in 2019, raising it from $30,000 to the current rate of a refund of 60 percent of the excise paid to a total of $100,000 per financial year.*
A recent report commissioned by the IBA and released in March this year, found that Australia's independent brewers contribute $1.93 billion in economic output to the Australian economy, directly employ 7,000 people and the industry indirectly supports more than 33,000 jobs. The IBA also said in their statement that the organisation forecasts an investment of more than than $500m in new manufacturing capability in Australia and the creation of an additional 6,300 direct and 23,000 supporting jobs over the next five years.
The Crafty Pint spoke to the IBA's general manager Kylie Lethbridge in March, soon after she was in Canberra to spruik the credentials of the indie beer industry and promote it ahead of this year's budget. She said at the time that their message to lawmakers had been well received and the ability of many breweries to survive and even thrive during COVID had shown the industry's resilience and the potential for growth.
Kylie said at the time: “What we’re saying is, 'Look at the potential for growth, we have the numbers now, and if you partner with us to keep investing and creating jobs, then you’re actually backing a winner.'.”
As a result of today's announcement, as of the 2021-22 financial year 100 percent of excise paid will be refundable up to $350,000.