Government releases WET Rebate and eligibility criteria discussion paper

05 September, 2016 by

By Andy Young

The Federal Government has published its discussion and implementation paper – ‘Wine Equalisation Tax Rebate: Tightened Eligibility Criteria’.

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The paper is looking to Australia’s wine industry for comments on the WET Rebate reforms announced by the Government in its Budget earlier this year. In particular the Government is requesting submitters to consider the following questions:

  1. For rebatable wine, is the proposed definition of packaged and branded wine appropriate? If a trademark approach is used, what types of trademarks should be permitted (e.g. exclusively licensed trademarks) and what would be the impact.
  2. For eligible producers, how should a winery ownership and leasing test be applied? What should be the nature and extent of investment in the wine industry required to access the rebate, and how can this be implemented?
  3. What is the impact from a 1 July 2019 start date of the tightened eligibility criteria? How might this change from an earlier transition period?

In its paper the Government said: "The wine industry has called for reform of the WET rebate based on their concern it has moved beyond its original policy intent, compromising profitability in the wine industry, through:

  • the ability to create artificial business structures to access the rebate and claim multiple rebates.
  • the conversion of uncommercial grapes into bulk wine for the sole purpose of claiming the rebate, affecting the pricing of both grapes and wine.

"The Government acknowledges the response from the wine industry following the Budget announcement and will work closely with the wine industry to implement reforms to the WET rebate. The Assistant Minister for Agriculture and Water Resources has met with stakeholders in the major wine regions since the Budget announcement to obtain early feedback from the industry. Stakeholders have raised that removing the rebate from bulk and unbranded wine is an important driver to industry’s restructure and would like it to happen as soon as possible."

That drive to bring in the changes sooner rather than later is something voiced by many winemakers. TheShout recently spoke to Neil McGuigan, who said that the WET Rebate should be cut from bulk wine immediately.

It is a sentiment echoed by Mitchell Taylor the managing director of Taylors Wines and chair for medium winemakers for the Winemakers' Federation of Australia.

Taylor told TheShout: "We have got a Winemakers' Federation board meeting on Wednesday and we will be discussing the WFA position, and we will have Senator Anne Ruston addressing our meeting, but we will certainly be talking about why do we have to wait for the bulk and unbrandeds to be phased out.

"I think the industry is fairly united on bringing that date forward, unless you are one of those particular producers. But generally most of us winemakers would like that one to be brought forward and that would definitely help.

"The WET Rebate's original intent was to help the regional winemakers who are investing in regional economies and it was certainly never intended for businesses with complex business structures to be allow multiple rebates to go through.

"I agree with Neil that the rebate should go on bulk wine today and I also think we need to look at the definition of a winemaker and the eligibility, so we can tighten that definition up."

Taylor added: "With the supply and demand we still need to get our industry in better balance, so we really do need to look at what the price of fruit is and we are wanting to have sustainable grape growers who are playing by the rules. We don't want to have a market that is supporting some other growers who might be doing some clever things with how they structure their companies and how many time they claim the rebate. We want to have a level playing field so that the grape growers and winemakers who are playing by the rules are treated fairly and equally.

"We need to get the rebate supporting the regions and building up the tourism which is vital for our industry and the rural economy."

The Government's discussion paper is now available through the Treasury website and submissions close on 7 October.