What are the three different alcohol taxes?
In Australia all alcoholic products have an additional tax on top of the regular GST 10% tax. One of the key reasons that Australia has such a high alcohol tax in comparison to other countries is to discourage excessive alcohol consumption. Navigating the tax system in Australia can be quite confusing for many, so in this article, we outline the basic differences between the three main types of alcohol tax.
WET (Wine Equalisation Tax)
Firstly we look at WET Tax, which is an acronym for Wine Equalisation Tax. We start here as WET tax is one of the lower of the tax rates.
A WET tax is for all wine products and is consistently issued at 29% of the wholesale price of each bottle. WET tax doesn’t just apply to wine however. The ATO states that WET can be applied to:
grape wine
grape wine products
fruit & vegetable wines
some cider & perry products
mead
sake.
There are various conditions that must be met to attract WET tax which is one of the lower tax rates possible. The ATO outlines more about the products WET applies to here.
Excise (Beer)
In the world of excise, ‘beer’ refers to a brewed product where yeast fermentation has occurred to malted or unmalted cereals.
There are various other conditions that must be met for a beverage to be determined as a ‘beer’ tax product. This 'beer' tax can be applied to more products than traditional beer.
A beer tax applies to certain rice based beverages as well, which is the base ingredient for a number of Seltzer products in the Australian market. The exact rate of the beer tax depends on:
the alcohol content
amount of litres, and
how the beverage is packaged.
More info on beer tax can be found here.
Excise (Spirits)
It may come as no surprise that spirits attract the highest tax rate of all alcoholic beverages.
Excise is applied based on the pack size of the liquid, as well as the strength of the beverage. This way, the tax is applied only to the portion of the beverage that is alcoholic.
For example, if you had a litre of an alcoholic RTD beverage that was 10% strength, you would multiple 1L x 0.1 x 100.05 which is the current excise rate in Australia as of August 1st 2023. The excise on that beverage would be $10.005.
More information on excise can be found here.
How do you know what type of tax applies to your beverage?
The law is strict and often confusing, we recommend talking to a certified accountant, or the ATO has avenues to contact them to discuss further.
At IDL we produce beverages that fit under all three tax options mentioned above. Each beverage product may fall under a different tax section, it depends on a number of factors as the laws are quite rigid.
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