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ATO Interpretative Decision

ATO ID 2007/98 (Withdrawn)

Excise
Quotation that is false or misleading in a material particular

Attention This ATO ID is withdrawn because it contains a view in respect of a provision of the A New Tax System (Wine Equalisation Tax) Act 1999 that does not apply after the 2017-2018 income year. Despite its withdrawal, the ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2017/18 income year.
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 6 September 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Is a quote effective for the purposes of section 13-30 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) where:

·
 the purchaser notifies the producer on the quotation form that they do not intend to make a goods and services tax (GST)-free supply of the wine the subject of the quote, and
·
 the purchaser also notifies the producer at or before the time of the sale by some means other than the quotation form that the wine is to be exported?

Decision

No. A quote is not effective for the purposes of section 13-30 of the WET Act where:

·
 the purchaser notifies the producer on the quotation form that they do not intend to make a GST-free supply of the wine the subject of the quote, and
·
 the purchaser also notifies the producer at or before the time of the sale by some other means other than the quotation form that the wine is to be exported.

Facts

A producer sold rebatable wine to a purchaser who provided the producer with a quotation of their Australian business number (ABN) in the approved form at or before the time of the sale.

The declaration on the quotation form stated that the purchaser did not intend to make a GST-free supply of the wine.

The producer issued an invoice to the purchaser for the wine which described the goods as 'wine for export'.

The producer did not charge wine equalisation tax (WET) on the dealing.

The producer claimed the producer rebate.

Reasons for Decision

WET is imposed on assessable dealings with wine. The Assessable Dealings Table in section 5-5 of the WET Act sets out all of the dealings with wine that can be subject to WET.

In some circumstances an assessable dealing with wine is exempt from WET. All of the exemptions are set out in Division 7 of the WET Act. Section 7-10 of the WET Act provides an exemption based on quoting. Subsection 7-10(1) of the WET Act states that:

1)
  A sale is not taxable if the purchaser quotes for the sale at or before the time of the sale.

Quoting is a mechanism designed to relieve or defer WET on wine to a later assessable dealing or to give effect to exemption from wine tax for a particular supply of wine.

An entity that is registered for GST is entitled to quote their ABN for a dealing with wine in certain circumstances. These circumstances are detailed in section 13-5 of the WET Act which states:

(1)
  You are entitled to quote your ABN for a dealing with wine if, at the time of quoting, you have the intention of dealing with the wine in any of the following ways:
(a)
 selling the wine by wholesale or by indirect marketing sale, while the wine is in Australia;
(b)
 selling the wine, by any kind of sale, while it is in Australia (this ground in only available if you are mainly a wholesaler at the time of quoting);
(c)
 using the wine as a material in the manufacture or other treatment or processing, whether or not it relates to or results in other wine;
(d)
 making a supply of wine that will be GST-free.
(2)
  However, you are not entitled to quote unless you are registered.
(3)
  ...

In addition to the grounds for quoting specified in section 13-5 of the WET Act, the quote must comply with various other conditions set out in the WET Act for it to be effective.

For example, section 13-20 of the WET Act provides that for a quote to be effective it must be made in the approved form and it must be made at or before the time of the dealing.

The approved form includes a declaration that must be completed by the purchaser stating whether they do or do not intend to make a GST-free supply of the wine.

The declaration is relevant because section 19-10 of the WET Act provides that a producer is not entitled to a producer rebate under section 19-5 of the WET Act if the purchaser notifies them at or before the time of the dealing that they intend to make a GST-free supply of the wine.

Section 9-30 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply is GST-free if it is GST-free under Division 38 of that Act, or under a provision of another Act. Section 9-30 also provides that a supply is GST-free if it is the supply of a right to receive a supply that would be GST-free.

One example of a GST-free supply - set out in Item 1 of the table in section 38-185 of the GST Act - is where the supplier of goods exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after:

·
 the day on which the supplier receives any of the consideration for the supply, or
·
 if the supplier gives an invoice for the supply, the day on which the supplier gives the invoice.

Item 2 of the table in section 38-185 of the GST Act sets out a similar 60-day rule for exported goods that are paid for by instalments.

The WET Act provides that under certain circumstances a quote is not effective. The circumstances under which a quote is not effective are set out in sections 13-20 and 13-30 of the WET Act. Section 13-30 of the WET Act provides (emphasis added):

   A quote is not effective, so far as it would have resulted in an exemption or a ground for a CR6 wine tax credit, if at the time of the quote the entity to which the quote is made has reasonable grounds for believing that :

(a)
 you are not entitled to quote in the particular circumstances; or
(b)
 the quote is not made in the approved form; or
(c)
  the quote is false or misleading in a material particular (either because of something stated in the quote or something left out) .

In this case, the purchaser notified the producer at the time of quoting that they did not intend to make a GST-free supply of the wine the subject of the quote. However, the purchaser also notified the producer at or before the time of the sale by some means other than the quotation that the wine would be exported. Subsequently, the producer invoiced the purchaser for the wine, describing it on the invoice as 'wine for export'.

It is the Commissioner's view that an exporter would, where possible, make every reasonable attempt to avoid incurring a GST-liability in relation to goods they export. Therefore, as a general rule, it would be common commercial practice for exporters to export goods from Australia within the 60-day timeframe set out in section 38-185 of the GST Act.

On this basis, the Commissioner considers that where a producer has been made aware that the wine they are selling under quote is to be exported from Australia, they have reasonable grounds for believing that the wine will be exported as a GST-free supply.

It is the Commissioner's view that in a taxation context, a material particular is something that is likely to affect a decision regarding the calculation of an entity's tax liability or entitlement to a credit or refund. An inconsequential fact which does not affect an entity's tax position will not be a material particular.

The system of quoting directly affects the WET liability of the party to whom the quote is made. That is, where an entity that is registered or required to be registered for GST has an assessable dealing with wine, they will have a liability to WET unless the purchaser has provided the entity, at or before the time of sale, with an effective quote exempting the sale from WET.

Where the entity making the sale is a producer, the intentions of the purchaser, in terms of whether they intend to make a GST-free sale of the wine are relevant in determining whether the producer has an entitlement to a producer rebate.

In this case, because the producer invoiced the purchaser for 'wine for export', it is reasonable to conclude that the producer had reasonable grounds for believing at the relevant time that the purchaser intended to make a GST-free supply of the wine.

As the declaration on the approved quoting form indicated that the purchaser did not intend to make a GST-free supply of the wine when it is evident on the facts that they did, the quote is false or misleading in a material particular.

Therefore, the producer had reasonable grounds for believing the quote was false or misleading in a material particular and, as such, it is not an effective quote for the purposes of section 13-30 of the WET Act.

Amendment History

Date of amendment Part Comment
29 November 2013 Related Public Rulings Updated WET rulings references.

Date of decision: 1 May 2007

Legislative References:
A New Tax System (Wine Equalisation Tax) Act 1999
   section 7-10
   section 13-5
   section 13-20
   section 13-30
   section 19-5
   section 19-10
   section 33-1

Related Public Rulings (including Determinations)
Wine Equalisation Tax Ruling WETR 2009/1
Wine Equalisation Tax Ruling WETR 2009/2

Keywords
Alcohol
Obtain goods under quote
Wine

Siebel/TDMS Reference Number: 5650825

Business Line: Indirect Tax

Date of publication: 11 May 2007

ISSN: 1445-2782

ATO ID 2007/98 (Withdrawn) history   Top  
   Date   Version 
    1 May 2007   Original statement   
   29 November 2013   Updated statement   
 You are here ®   6 September 2017   Withdrawn   


 


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