Industry welcomes tax break for craft brewers and distillers

04 May, 2018 by Andy Young

Australia’s craft brewers and distillers have widely welcomed Treasurer Scott Morrison’s announcement on changes to tax rates on smaller kegs and also an increase in the alcohol excise refund scheme cap.

The Treasurer revealed that the Government will increase the amount beverages companies can claim back on their excise and that it will also extend the concessional draught beer excise rate to smaller kegs, typically used by craft brewers.

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The alcohol excise refund scheme cap will increase from $30,000 a year to $100,000, from 1 July 2019 for all brewers and distillers.

Morrison said: “This additional tax relief, on top of the Government’s legislated tax cuts for small and medium businesses, will allow craft brewers and distillers to compete on fairer terms with large beverage companies.

“This not only champions the craft brewers that we’ve all grown to love, it raises a very tantalising prospect for Australians: the likelihood of cheaper craft beer.

“The extra help to craft brewers and distillers will drive competition in a sector currently dominated by large domestic and multinational brewers, opening the door to new products and will likely put downward pressure on prices.”

Stu Gregor co-founder of Four Pillars and President of the Australian Distillers Association (ADA) was understandably welcoming of the news, although he did caution that more still needs to be done to fully correct alcohol taxation in Australia.

“The excise break is terrific news and sensible policy from the government and we warmly welcome it. We also are pumped for our craft beer mates who won’t get slugged if they want to use smaller kegs,” he told TheShout.

“We still have some way to go to get proper equity in excise but the increase in the rebate from $30,000 to $100,000 is terrific news and we thank the Treasurer and also we thank all those distillers and consumers who have been lobbying their local members on this issue for the past couple of years.”

In revealing the changes to the taxation on smaller kegs, Morrison added: “Currently, draught beer sold in kegs exceeding 48 litres is taxed at lower rates compared with beer sold in smaller kegs. This is unfair for smaller brewery businesses. Extending the concessional draught beer excise rates to kegs of 8 litres or more will level the playing field for craft brewers, which typically use smaller sized kegs, to distribute their beer to pubs, clubs and restaurants.”

The Independent Brewers Association (IBA), welcomed the announcement as great news for the industry.

“This is great news for independent brewers, great news for consumers and great news for job creation,” said IBA Chair, Ben Kooyman.

“Having the Federal Government make these changes shows that they realise what an amazing industry we have and will enable our members to expand.

“Australia’s 450 small, independent brewers will take that additional excise rebate and invest it back in their businesses. That will mean they will be able to increase their production, invest in quality improvement and most importantly hire more staff to join over 2400 Australians the industry already employs.”

He added: “A reduction to the excise rate on smaller kegs has the potential to fundamentally change the way many of our members do business. It will allow them to win customers in smaller venues and in distant markets. And having to deal with full 50 litre kegs is one of the biggest workplace health and safety issues in many breweries. This will give brewers more options.”

Cameron Syme co-founder and of Limeburners and Vice President of the ADA also welcomed the move, but called on more action from the Government, highlighting how much Australian distillers pay in tax compared to their colleagues in the US.

“From our point of view this is a very welcome release with an increase in excise rebate to $100,000 and we appreciate what Government is doing there, but distillers are still taxed at a very discriminatory rate compared to beer and wine, and very discriminatory compared to overseas,” Syme told TheShout.

“We’ve done some research which shows that in America, by the time their distillers have paid $180,000 in tax, we will have paid about $36m in tax. So internationally we are still significantly disadvantaged but we see this second excise release as very significant and important for our industry, and we look forward to Government making further changes to help grow our industry, which can become one of Australia’s big export industries in time.”

Australia’s craft brewers have also widely welcomed the news, with Richard Adamson, co-founder at Young Henry’s, telling TheShout: “Any excise relief is welcome and will be of particular benefit to breweries on their journey. It’s great that all sides of politics are recognising the contribution the sector is having to the economy.”

“It’s a very sensible decision and it’s giving more recognition to a very important industry,” Lawrence Dowd, National General Manager at Colonial Leisure Group, told TheShout. “It will allow us to invest money in things that will improve the output and quality of what we do.”

Commenting on the reduction in excise on smaller kegs, Dowd said that this change will allow Colonial to get some of its more experimental beers out to a wider range of small bars and pubs.

“I think it will create a bit of a market there for people that focus purely on smaller batch beers. It’s going to create a lot of opportunities,” he added.