The Australian Tax Office is currently consulting on a draft excise determination “Alcohol excise: the addition of water to beer”, with the Independent Brewers Association expressing concern about the draft's consequences for local brewers.
You can read the IBA's concerns and submissions below and interested parties have until September 27 to contact the ATO with their own submissions and to support the IBA's submission.
ATO Introduces New Test To Define Beer
On 12 June 2024, the Australian Tax Office began consultation on a draft excise determination called “Alcohol excise: the addition of water to beer”. After push back from the IBA and the broader industry, that draft was ultimately scrapped.
Then the ATO released draft 2 of the ruling and it is far worse than the first one. This Draft Ruling proposes to create a new test, where the ATO gets to decide whether a product is ‘conventionally understood as beer’. It’s a bit complicated but if you read our submission below we think you will get the picture.
How did we come to our position?
Because of the complicated nature of this response we directly consulted with a dozen brewers, spoke with suppliers and also with our lawyer.
What does this mean for you?
Our response outlines the repercussions for independent breweries if this ruling was to come into place, however the key takeouts are big:
- When developing innovative new products, you might not know whether at some point in time the ATO decided your product was not ‘conventionally understood’ to be beer.
- You could be audited by the ATO years down the track when you’ve been paying excise only to learn that the ATO now thinks your product was not ‘conventionally understood’ to be beer and you need to back pay excise.
What should you do?
We know a number of breweries are already making their own submission, and some are obtaining legal advice on the issues. So if this matter concerns you, you could make a submission Sally Fonovic (sally.fonovic@ato.gov.au) detailing your concerns, or voicing your support for our position. Submissions close on Friday 27 September.
