Industry guidelines: Winemakers
- What is the wine equalisation tax (WET)?
- What is the New Zealand producer rebate?
- Who is eligible for the producer rebate?
- Approval as a New Zealand participant
- When does the New Zealand producer rebate start?
- What is the maximum producer rebate I can claim?
- Is the producer rebate income for New Zealand income tax purposes?
- Currency to be used
- More detail on the wine equalisation tax (WET)
- Who to contact
The wine equalisation tax (WET) is a value-based tax paid on certain dealings with wine sold in Australia. This tax is charged under the Australian tax legislation. These dealings include wholesale sales and untaxed wine sold by retail. For wholesale sales, WET is paid on the selling price (excluding WET and goods and services tax) of the wine at the last wholesale sale. For untaxed wine sold by retail, WET is charged on a notional wholesale selling price. The rate of the WET is 29% of the wholesale value.
The producer rebate is for wine that is:
- produced in New Zealand, and
- subject to a dealing in Australia on which WET is paid.
The producer rebate scheme entitles you to a rebate of 29% of your selling price of the wine (up to a maximum amount of sales - refer "What is the maximum producer rebate I can claim?") net of any expenses unrelated to the production of the wine in New Zealand.
Only producers of wine made in New Zealand and who are approved as a New Zealand participant are eligible for the producer rebate. A producer is defined as an entity that manufactures the wine, or supplies another entity with the grapes, other fruit, vegetables or honey from which the wine is manufactured (contract winemaking).
Before you can claim the producer rebate, you must be approved as a New Zealand participant. To qualify as a New Zealand participant, you must produce wine in New Zealand which is, or is likely to be, exported to Australia. When you have completed and submitted the application form and received approval, you are eligible to claim for the producer rebate.
The completed application form should be sent to Inland Revenue.
- Eligibility for the producer rebate scheme for producers of wine in New Zealand is intended to apply from 1 July 2005.
- It applies from that date to dealings with the wine in Australia on which WET is paid by your or another entity.
- You will be entitled to make your first producer rebate claim after 30 June 2006.
The maximum rebate in a financial year (1 July - 30 June) is AU$290,000. This is 29% of AU$1m* worth of sales.
*For the financial year commencing on 1 July 2006, the rebate will increase to include around AU$1.7m worth of sales, making the maximum rebate amount AU$500,000.
If you are an associated producer of one or more other producers (they may be Australian producers and/or New Zealand producers) for a financial year, the maximum rebate you are entitled to as a group for a financial year is the same as above.
The producer rebate is considered to be income for New Zealand income tax purposes and must be returned in the income year in which the amount is received.
Example: On 24 July 2006, you receive AU$290,000 WET Rebate. This amount (converted into New Zealand dollars) is required to be returned as taxable income in your income tax return from 1 April 2006 to 31 March 2007.
All currency must be converted to Australian dollars. Selling prices and expenses used to calculate the producer rebate that are expressed in $NZ must be converted to Australian currency.
Australia have specific rules which tell you which exchange rate to use to convert these amounts. Generally, these require amounts to be converted at the exchange rate prevailing at the time of a transaction, or at an average rate.
You have three options for conversion. These options are referred to as the Reserve Bank of Australia (RBA) rate, the agreed rate and the average yearly Reserve Bank of New Zealand (RBNZ) rate. If you require more information on this please refer to the Wine Equalisation Tax (WET) - foreign currency conversions factsheet.
If you require a foreign exchange rate for a currency not listed in the schedule, please use any reasonable externally sourced exchange rate for that currency.
For more detail on the wine equalisation tax - producer rebate for New Zealand wine producers, refer to the Australian Taxation Office website where there is further information available regarding:
- what is covered by the producer rebate
- what is not covered by the producer rebate
- which dealings with wine qualify for the producer rebate
- which dealings with wine do not qualify for the producer rebate
- calculating the producer rebate, and
- claiming the producer rebate.
You can get more information on the producer rebate for New Zealand producers by visiting the Australian Taxation Office website, or by:
- phoning us on 0800 377 774
- sending us a fax on (09) 984 3110
- emailing us at firstname.lastname@example.org, or
- writing to us at WET Rebate, P O Box 33150, Takapuna 0740.
Date published: 01 Jul 2013
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