In light of the 2016-2017 Federal Budget handed down on 3 May, participants in the wine industry have expressed significant concerns regarding the Federal Government’s proposal to reform the Wine Equalisation Tax Rebate (WET Rebate) and the related eligibility criteria.
The Turnbull Government’s reforms are in response to apparent misuse of the WET Rebate system and distortion of the wine market in recent times. The intention of the reforms is to strengthen the wine industry for the long term and to return the WET Rebate to the original intention of supporting small wine producers in rural and regional Australia.
The key reforms are based on the findings of a consultative group specifically convened by the Government to address this topic, are:
- Tightening of the eligibility criteria for the WET Rebate including a requirement that a wine producer must own an interest in a winery and sell packaged, branded wine domestically. The definition of ‘winery’, ‘producer’ and ‘rebateable wine’ within the criteria will be subject to amendment through further consultation and will therefore not take immediate effect.
- A phased reduction of the WET Rebate cap from $500,000 to $350,000 will take effect on 1 July 2017 and will be further reduced to $290,000 from 1 July 2018.
- Provision of funding to the ‘Australian Grape and Wine Authority’ and the ‘Export Market Development Grants Scheme’ will promote wine tourism in Australia and promote Australian wine overseas and will take effect from 1 July 2016.
Participants in the wine industry who may be affected by the reforms will need to consider, and seek advice, about the financing and operation of their business in light of these changes.
For more information or advice, please contact: