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Wine Equalisation Tax Ruling

WETR 2006/1A5 - Addendum


Wine equalisation tax: the operation of the producer rebate for producers of wine in New Zealand

Attention Please note that the PDF version is the authorised version of this ruling.
Go to notice View the consolidated version for this notice.


Addendum

This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953 . It amends Wine Equalisation Tax Ruling WETR 2006/1 to update the changes made to the producer rebate for producers of wine in New Zealand.

WETR 2006/1 is amended as follows:

1. Preamble

Omit entire preamble; substitute:

Exclamation This publication provides you with the following level of protection:
This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.
A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.
If you rely on this Ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this Ruling if it turns out that it does not correctly state how the relevant provision applies to you.
[Note: This is a consolidated version of this document. Refer to the Legal Database ( http://www.ato.gov.au/law ) to check its currency and to view the details of all changes.]

2. Header

For pages on which Appendices are located, omit 'legally binding' from the page status; substitute 'not legally binding'.

3. Paragraph 1 heading

Omit the heading 'What this ruling is about'; substitute 'Summary - what this Ruling is about'.

4. Contents

Omit the Contents; substitute:

Contents Para
LEGALLY BINDING SECTION:  
Summary - what this Ruling is about 1
Background 6
Frequently used terms 14B
Ruling 16
Date of effect 118A
NOT LEGALLY BINDING SECTION:  
Appendix 1 118B
Appendix 2 - Compliance guide 118C
Appendix 3 118AG
Appendix 4 118AK
Detailed contents list 119

5. Paragraph 1

Omit from the last sentence; 'the wine tax although it is also known as the wine equalisation tax (WET.)'; substitute 'WET.'

6. Paragraph 2

(a) Omit from the first sentence 'wine tax'; substitute 'WET'.

(b) Omit from the second sentence 'It includes explanation about eligibility'; substitute 'It also explains who is eligible'.

7. Paragraphs 4 and 5

Omit the paragraphs and associated heading.

8. Paragraph 6

(a) In the heading, omit 'wine tax'; substitute 'WET'.

(b) Omit all occurrences of 'wine tax' and 'the tax'; substitute 'WET'.

(c) Omit 'dealings and can'; substitute 'dealings. These can'.

(d) Omit footnote 1.

9. Paragraph 7

(a) Omit the paragraph; substitute:

7. WET is normally a once only tax designed to fall on the last wholesale sale. It is calculated at the rate of 29% of the taxable value of the dealing.

(b) Omit footnotes 2 and 3.

10. Paragraphs 8 and 9

Omit the paragraphs, including footnote 4.

11. Paragraph 10

(a) Omit '2004'; substitute '2009'.

(b) Omit 'the wine tax'; substitute 'WET'.

(c) After the paragraph, insert new paragraph:

10A. This Ruling reflects changes made to the WET Act by Treasury Laws Amendment (2017 Measures No. 4) Act 2017 .

12. Paragraph 11

Omit the paragraph, including footnote 5; substitute:

11. A rebate of WET is available for producers of rebatable wine that are registered or required to be registered for GST in Australia.

13. Paragraph 12

Omit the paragraph.

14. Paragraph 13

Omit the paragraph; substitute:

13. From 1 July 2005, access to the producer rebate was extended to eligible New Zealand wine producers that have their wine exported to Australia. New Zealand wine producers may apply to the Australian Commissioner of Taxation (Commissioner) to become approved New Zealand participants. If approved, a producer can claim the New Zealand wine producer rebate where it manufactures wine in New Zealand, has the wine exported to Australia, meets certain eligibility requirements and can demonstrate WET has been paid on the wine in Australia.

15. Paragraph 14

(a) In the first sentence omit 'net of'; substitute 'excluding'.

(b) Omit the second sentence.

16. Paragraph 14A

(a) Omit the paragraph, including footnote 5A; substitute:

14A. The maximum amount of rebate a New Zealand producer (or group of associated producers) can claim in a full financial year is A$350,000.

(b) After the paragraph, insert heading 'Frequently used terms'.

(c) After the new heading, insert new paragraphs:

14B. Australia - From 1 July 2015, the term 'Australia' was replaced in nearly all instances within the goods and services tax, luxury car tax, and WET legislation with the term 'indirect tax zone'.5B The scope of the term is the same as the repealed definition of 'Australia' used in those Acts. This change was made for consistency of terminology across the tax legislation, with no change in policy or legal effect. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

14C. Financial year - Where the term 'financial year' appears in this Ruling, it refers to a period of 12 months beginning on 1 July.

(d) At the end of the first sentence in new paragraph 14B, insert footnote 5B:

5B Treasury Legislation Amendment (Repeal Day) Act 2015.

17. Paragraph 15

(a) Omit the paragraph.

(b) Omit the heading after the paragraph 'Ruling and explanation'; substitute 'Ruling'.

18. Paragraph 16

(a) Omit the paragraph and associated heading; substitute:

Who is eligible for the producer rebate?

16. You can claim a producer rebate for wine for a financial year where you meet all of the following requirements5C:

·
 you are approved as a 'New Zealand participant'
·
 you are the 'producer' of the wine
·
 the wine was produced by you in New Zealand and exported to Australia
·
  WET was paid on the wine in Australia
·
 of the total volume of the wine, you owned at least 85% as 'source product' at all times from immediately prior to crushing (or immediately prior to fermentation in the case of mead and sake), and
·
 at the time of the assessable dealing on which WET was paid, the wine was packaged in a container for retail sale:
-
 of no more than 5 litres (51 litres for cider and perry), and
-
  branded with a trade mark owned by you (or an associated entity) that identifies you or can be readily associated with you.

(b) At the end of the first sentence, insert footnote 5C:

5C Subsection 19-5(2).

19. Paragraph 17

Omit the paragraph; substitute:

17. Before you can claim a producer rebate you must be approved as a New Zealand participant.

20. Paragraph 18

Omit the paragraph (excluding footnote 6); substitute:

18. To be considered for approval as a New Zealand participant, you must apply in writing in the approved form to the Commissioner.6 However, to streamline the approval process, you can send your application for approval to New Zealand Inland Revenue, which will send the application on to the Australian Taxation Office (ATO).

21. Paragraph 19

(a) Omit the paragraph (including footnote 7 but excluding footnote 8); substitute:

19. For you to be eligible for approval as a New Zealand participant, the Commissioner must be satisfied that:

·
 you are a producer of rebatable wine in New Zealand, and
·
 the rebatable wine has been, or is likely to be, exported to Australia.8

(b) After the paragraph, insert:

Rebatable wine

19A. Rebatable wine means grape wine, grape wine products, fruit or vegetable wine, cider or perry, mead or sake. Each product is separately defined in the WET Act.

19B. The definitions and examples of these various products are set out in Appendix 1 to this Ruling and are discussed in paragraphs 8 to 36 of WETR 2009/1.

Producer of rebatable wine

19C. You are entitled to a producer rebate for rebatable wine only if you are the 'producer' of the wine.8AA

(c) At the end of new paragraph 19C, insert footnote 8AA:

8AA Subsection 19-5(2).

22. Paragraph 20

(a) Omit the heading.

(b) Omit the paragraph (including footnote 8A); substitute:

20. There are two main elements to the definition of producer. You are the producer of rebatable wine if you:

·
 'manufacture' the wine, or
·
 supply 'source product' to another entity that manufactures wine from it on your behalf.9

(c) Omit wording in footnote 9 'Section 33-1'; substitute:

9 Source product' is a defined term in the WET Act and is discussed in paragraphs 35C and 35D of this Ruling.

(d) After the paragraph, insert new heading 'Manufacture of wine'.

23. Paragraph 21

(a) Omit the paragraph (excluding footnote 9A); substitute:

21. Manufacture is defined9A in the WET Act to include:

(a)
 production
(b)
 combining parts or ingredients so as to form an article or substance that is commercially distinct from the parts or ingredients, and
(c)
 applying a treatment to foodstuffs as a process in preparing them for human consumption.

(b) Omit wording in footnote 9A; substitute 'Section 33-1.'

24. Paragraph 22

Omit the paragraph (excluding footnote 10); substitute:

22. The definition of manufacture is inclusive, not exhaustive, and extends the ordinary meaning of manufacture.10

25. Paragraph 23

(a) Omit the paragraph, substitute:

23. We consider that wine is manufactured when processes are applied to inputs that result in an article (wine) that is commercially distinct from those inputs.10A

(b) At the end of the paragraph, insert footnote 10A:

10A McNichol and Anor v. Pinch [1906] 2 KB 352; Federal Commissioner of Taxation v. Jack Zinader Pty Ltd [1949] HCA 42.

26. Paragraph 24

Omit the paragraph, substitute:

24. Whether or not certain processes that are carried out constitute manufacture is a matter of fact and degree in each case.

27. Paragraphs 25 to 28

Omit the paragraphs.

28. Paragraphs 29 to 32

(a) Omit the heading, substitute ' Example 1 - manufacture from grapes '.

(b) Omit the paragraphs (including footnote 11); substitute:

29. NZWine Co grows Merlot grapes on its vineyard. It crushes the grapes and carries out primary and secondary fermentation, filtration and stablisation. The resulting Merlot wine is packaged in 750ml bottles ready for retail sale.

30. As the wine is a commercially distinct product from its inputs, NZWine Co has manufactured the wine.

Example 2 - purchasing and bottling

31. NZBottle Co purchases bulk Chardonnay wine from Chard Pty Ltd in isotankers. The Chardonnay is pumped from the isotanker into a storage tank at NZBottle Co's premises in preparation for bottling. After it has passed through a fine mesh filter in the bottle filling line to reduce the risk of insoluble matter making its way into the bottles, the Chardonnay is placed in bottles that have been washed. The bottled wine is labelled and branded with a registered trade mark.

32. The processes undertaken to package the bulk wine are not considered to result in a product that is commercially distinct from its inputs and as such, NZBottle Co has not manufactured the Chardonnay wine.

Blending as manufacture

32A. In the wine industry it is a normal part of winemaking to blend wines. In some cases the wines that are blended may be different varieties of wine, for example Cabernet Sauvignon and Merlot. In other cases the blended wines may be the same variety of wine but with each individual blended wine having characteristics that, when combined with the characteristics of the other blended wine, results in a wine with its own commercially distinct characteristics.

32B. Where you combine different wines (or quantities of the same variety of wine that have different characteristics) to produce wine with its own characteristics that are distinct from the inputs, you manufacture wine.

Example 3 - manufacture by blending own wine with purchased wine

32C. NH Wines Ltd manufactures Cabernet Sauvignon wine from fresh grapes it owns, and purchases bulk Merlot wine from another winemaker. NH Wines Ltd blends the wines to produce their own distinctive Cabernet Merlot wine.

32D. NH Wines Ltd manufactures the Cabernet Merlot wine.

Example 4 - blending wine with grape juice concentrate

32E. Blend Co purchases bulk Grenache wine from BBB Wines. To increase the sweetness of the wine, Blend Co blends the Grenache wine with grape juice concentrate before bottling. The grape juice concentrate comprises 2% of the total volume of the finished product.

32F. The addition of the grape juice concentrate to the Grenache wine is considered to have resulted in a product that is commercially distinct from its inputs, so Blend Co is considered to have undertaken manufacture.

32G. Although wine blending or further treatment may be considered manufacture for the purposes of the definition of 'producer', you are not entitled to claim a rebate for blended or further manufactured wine unless you meet all of the other eligibility criteria, including the 85% source product ownership rule (see paragraphs 71A to 71H of this Ruling).

29. Paragraphs 33 to 35

(a) Omit the paragraphs, including footnote 12.

(b) After the paragraphs, insert:

'Producer' of wine - contract manufacture

35A. There are two limbs to the definition of producer. Under the first limb, you must manufacture the wine yourself (either personally or by engaging employees).

35B. Under the second limb, you will be the producer of wine where you engage a contract winemaker to manufacture the wine on your behalf, and you provide the winemaker with the source product from which the wine is made.

Source product

35C. Source product has the meaning given by subsection 19-5(4), and for each wine product is as follows:

·
 grape wine - fresh grapes
·
 grape wine products - fresh grapes
·
 fruit or vegetable wine - fruit or vegetables
·
 cider or perry - apples or pears
·
 mead - honey
·
 sake - rice.

35D. To qualify for a producer rebate, you must 'own' the source product from immediately prior to crushing (or immediately prior to fermentation in the case of mead and sake). We consider this to mean that you must have title to the source product before it is crushed or, where relevant, ferments.12A

(c) At the end of new paragraph 35D, insert footnote 12A:

12A Paragraph 1.15 of Explanatory Memorandum to Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

30. Paragraph 38 and heading

(a) Omit the heading; substitute ' Example 5 - wine that is not produced in New Zealand '.

(b) Omit all instances of 'NZ Wines'; substitute 'NZ Wines Co'.

31. Paragraph 38A

Omit the paragraph; substitute:

38A. Wine is not produced 'in New Zealand' if any additional manufacturing processes in the production of the wine occur in Australia, subsequent to its export from New Zealand. For example, if raw wine manufactured 'in New Zealand' undergoes stabilisation, fining, filtering and secondary fermentation in Australia before it is bottled for sale, the resultant, finished wine is not produced 'in New Zealand'. The finished bottled wine is not the same wine as that manufactured in New Zealand and exported to Australia.

32. Paragraph 39 and heading

(a) In the heading, omit 'Rebatable wine'; substitute 'Wine'.

(b) Omit the paragraph (excluding footnote 15); substitute:

39. To be approved as a New Zealand participant the Commissioner must be satisfied that the wine you have produced in New Zealand 'has been, or is likely to be, exported to' the indirect tax zone.15 Refer to paragraph 45 of this Ruling for an explanation of indirect tax zone.

33. Paragraph 40

In footnote 16, omit '3rd edition'.

34. Paragraph 41

In footnote 17, omit '3rd edition'.

35. Paragraphs 42 and 43

Omit the paragraphs.

36. Paragraph 44

(a) Omit the paragraph, substitute:

44. We consider that wine is exported from New Zealand when the wine is physically taken out of New Zealand with the intention that the wine be landed in Australia.17A

(b) At the end of the paragraph, insert footnote 17A:

17A Australian Trade Commission v. Goodman Fielder Industries Ltd (1992) 36 FCR 517 at 523; Wesley-Smith and Ors v. Balzary (1976-77) 14 ALR 681 at 688.

37. Paragraph 46

(a) Omit the paragraph; substitute:

46. 'Australia' means the 'indirect tax zone' which is defined in section 195-1 of the GST Act. It does not include any external Territory, but does include an installation (within the meaning of the Customs Act 1901) that is deemed by section 5C of the Customs Act 1901 to be part of Australia.17B

(b) At the end of the paragraph, insert footnote 17B:

17B Australia as defined does not include external territories such as Norfolk Island, Christmas Island or the Australian Antarctic Territory. Typically, the installations referred to in section 5C of the Customs Act 1901 are oil drilling rigs and similar mining exploration installations (see paragraph 51 of GSTR 2005/2).

38. Paragraph 47

Omit the paragraph, including footnote 18.

39. Paragraph 48

(a) In the first sentence omit 'a wine producer does not necessarily have'; substitute 'you do not need'.

(b) In the second sentence omit 'rebatable wine the entity has'; substitute 'wine you have'.

40. Paragraph 49

Omit the paragraph.

41. Paragraph 50

(a) Omit 'For the purposes of paragraph 19-7(2)(b), the expression,'; substitute 'We consider that the expression'.

(b) At the end of the paragraph, insert footnote 19A:

19A Australian Telecommunications Commission v. Krieg Enterprises Pty Ltd (1976) 14 SASR 303 per Bray CJ at 312-313, '...'likely' in the sub-section means 'probable' and I think that that means that there is a more than fifty per cent chance of the thing happening.

42. Paragraphs 51 to 60

Omit all paragraphs, including headings and footnotes 20 to 23.

43. Paragraph 61

(a) Omit the paragraph (excluding footnote 24); substitute:

61. If you are an approved New Zealand participant, you are entitled to claim the producer rebate for a financial year for wine that you produced in New Zealand if:24

·
 the wine is exported to Australia
·
 you or another entity paid WET for a taxable dealing with the wine during that financial year
·
 of the total volume of the wine, you owned at least 85% as source product from immediately prior to crushing (or immediately prior to fermentation in the case of mead and sake), and
·
 at the time of the assessable dealing on which WET was paid, the wine is packaged in a container that is suitable for retail sale:
-
 with a volume not exceeding 5 litres (51 litres for cider and perry), and
-
 that is branded by a trade mark that you (or an associated entity) own and that identifies you or can be readily associated with you.25

(b) Omit wording in footnote 24, substitute 'Paragraphs 19-5(2)(c)-(f) inclusive.'.

(c) Omit wording in footnote 25, substitute 'Subsection 19-5(7).'.

44. Paragraph 62

(a) Insert heading 'Wine exported to Australia'.

(b) Omit the paragraph; substitute:

62. Before you are entitled to claim the producer rebate, the wine you have produced in New Zealand must have actually been exported to Australia (within the meaning of 'export' set out in paragraphs 40 to 44 of this Ruling).

45. Paragraph 63

(a) In the first sentence, omit 'The New Zealand participant does'; substitute 'You do'.

(b) In the last sentence, omit 'the New Zealand participant'; substitute 'you'.

46. Paragraph 64

(a) Insert heading 'WET paid for an assessable dealing with the wine'.

(b) Omit the paragraph (including footnote 26); substitute:

64. We consider the requirement that you or another entity must have paid WET for an assessable dealing with the wine requires more than the existence of a liability for the WET and requires that WET for the dealing must have been remitted to the ATO.'

47. Paragraph 65

Omit the paragraph; substitute:

65. Where liability for WET on wine that is exported from New Zealand to Australia is incurred by an entity other than you, it may be difficult for you to establish whether that liability has been met and whether WET on the wine has been remitted to the ATO.'

48. Paragraph 66

(a) Omit the paragraph (including footnotes 28 and 29, but excluding footnote 27); substitute:

66. In light of this consideration and of the fact that you are:

·
 required to substantiate a claim for the rebate by providing supporting documents to evidence that WET has been included in an assessable dealing with the wine27, and
·
 not eligible to lodge the claim until after the end of the financial year in which the relevant taxable dealing took place

we consider that it is reasonable for you to assume that WET on the wine for which the rebate is being claimed has been remitted to the ATO by the end of the financial year in which the assessable dealing took place. However, it is not reasonable for you to make this assumption if you are aware, or should reasonably have been aware that the WET has not been paid to the Commissioner in respect of that wine (for example, if the entity that has the liability for WET is in liquidation).

(b) After the paragraph, insert new paragraph 66A:

66A. We consider that you should reasonably have been aware that the WET has not been paid if it is likely that an ordinary reasonable person in all of your circumstances would have been aware, at the time of making the claim, that WET has not been paid on the wine.'

49. Paragraphs 67 to 71

(a) Omit the paragraphs, headings and footnotes 30 and 31; substitute:

Source product - 85% ownership rule

71A. You are eligible for a producer rebate only where at least 85% of the total volume of the wine (in its final packaged and branded form ready for retail sale), originated from source product owned by you at all relevant times.31A

71B. Whether the 85% ownership of source product rule for wine is satisfied will be determined on the facts of each case.

71C. Paragraph 35C of this Ruling set out the source products for various types of wine.

71D. To comply with the 85% source product ownership rule, you must maintain ownership of at least 85% of the source product at all relevant times. For grape wine, grape wine products, fruit or vegetable wine, and cider or perry, you must own at least 85% of the source product from immediately prior to crushing all the way through the winemaking process, until the wine is placed in a container that meets the packaging and branding requirements discussed at paragraphs 71CD to 71DM of this Ruling.31B

71E. Because honey and rice are not crushed as part of the winemaking process, you must own the source product for mead and sake from immediately prior to initial fermentation all the way through the winemaking process, until the wine is placed in a container that meets the packaging and branding requirements discussed at paragraphs 71CD to 71DM of this Ruling.

71F. Whether a producer has ownership of source product at all relevant times will be a question of fact. Where source product is supplied to a producer under a supply agreement, we consider ownership of the source product will pass when the parties to the agreement intend and agree for ownership to pass.

71G. Where source product is crushed (or where relevant, fermented) before ownership passes under such an agreement, the producer will not own the source product at all relevant times.

71H. Where a security interest is registered in respect of source product supplied under an arrangement, the mere fact whether registration will not necessarily affect legal ownership. Consideration will need to be given to the terms of the particular arrangement.

Example 6 - ownership of source product at all times

71I. Winery Wines Co has grape supply contracts with Grapey Grapes Ltd and with Fresh Grape Co. Under the terms of these contracts, legal title to the grapes passes from the grape supplier to Winery Wines Co upon delivery of the grapes to their weighbridge.

71J. Winery Wines Co pays for the grapes in instalments paid both before and after the time that legal title passes.

71K. Winery Wines Co has a grape crushing and wine processing contract in place with another entity. The grapes owned by Winery Wines Co are crushed and made into bulk wine under contract. At no time does legal title to the grapes or the resultant wine pass to the entity responsible for crushing the grapes and processing the wine, or to any other entity.

71L. The bulk wine is delivered to Winery Wines Co's premises, where it is bottled in 750ml bottles and labelled with Winery Wines Co's registered trade mark.

71M. Winery Wines Co has maintained ownership of the grapes and resultant wine at all relevant times throughout the winemaking process.

Example 7 - retention of title clause

71N. Winery NZ has a grape supply contract with Grapes Co. Under the contract, Winery NZ pays for the grapes in three separate instalments.

71O. The contract includes a retention of title (Romalpa) clause, under which Grapes Co retains ownership of the grapes until they are paid for in full.

71P. The grapes are delivered to Winery NZ at the weighbridge and the grapes are crushed before the final instalment is paid.

71Q. As Winery NZ does not own the grapes as whole unprocessed grapes, it will not satisfy the 85% source product ownership rule in respect of these grapes.

Source product - deeming provisions

71R. The WET Act recognises that traditional winemaking processes involve the use of additives and ingredients (in small quantities) other than source product. Therefore, certain ingredients and additives are deemed, or taken to be, source product owned by you for the purpose of determining whether the 85% source product ownership rule has been satisfied.31C These ingredients are:

·
 grape spirit
·
 brandy
·
 alcohol used in preparing vegetable extracts (including spices, herbs and grasses)
·
 ethyl alcohol from a source specified in the regulations31D
·
 water
·
 grape juice concentrate that you have added to the wine31E, provided the grape juice concentrate does not comprise more than 10% of the total volume of the wine, and
·
 any other substance that you have added to the wine31F, provided that substance (or that substance together with similar substances) does not comprise more than 1% of the total volume of the wine.

71S. Although these ingredients are expressly deemed to be source product, they can only be added to rebatable wine to the extent allowable under the individual wine product definitions.

71T. Grape juice concentrate may be a source product when it comprises no more than 10% of the wine. Where grape juice concentrate comprises more than 10% of the total volume of the wine, then none of it is considered source product for that wine.

Example 8 - grape juice concentrate more than 10% of total volume of wine

71U. Wine-ing Co manufactures grape wine using whole unprocessed fresh grapes it has purchased, and maintains ownership of those grapes and the resultant wine throughout the winemaking process. Each 1 litre bottle of wine manufactured by Wine-ing Co contains the following ingredients:

·
  800mls originating from grapes owned by Wine-ing Co that it owned immediately prior to crushing, up to and including bottling, and
·
  200mls of purchased grape juice concentrate.

71V. As the grape juice concentrate comprises more than 10% of the total volume of the wine, it is not a source product for the purposes of determining whether the 85% source product ownership rule is satisfied.

71W. Wine-ing Co does not satisfy the 85% source product ownership rule and is not eligible for a producer rebate.

Example 9 - purchased grape pulp not source product

71X. Purple Wine Co has Shiraz wine made under contract on its behalf by another entity from purchased grape pulp (crushed unprocessed grapes) and purchased grape juice. Purple Wine Co maintains legal ownership of the grape pulp and the grape juice from the time of purchase, throughout the process, up to and including bottling and labelling.

71Y. Of the total volume of the packaged and labelled wine, 45% originates from the grape pulp and 45% originates from the grape juice.

71Z. Because neither grape pulp or grape juice are source product, Purple Wine Co does not satisfy the 85% source product ownership rule.

71AA. Substances added temporarily to wine as a part of the winemaking process do not count toward the 85% source product ownership test. For example, charcoal might be added and removed as part of a filtration process.31G

71AB. The addition of 'any other substances' refers to substances that include, but are not necessarily limited to yeast, preservatives, juice, colours, and flavours to the extent they are allowed under the wine definitions.31H Each of these substances is deemed to be a source product for which the producer satisfies the ownership test provided that substance comprises no more than 1% of the total volume of the wine in its final packaged and branded form.

71AC. Where a particular substance exceeds 1% of the total volume of the wine, no part of it is deemed to be source product that satisfies the ownership test.

71AD. Similar substances are considered together for the purpose of determining whether 'any other substance' makes up more than 1% of the total volume of the wine. As this is not a defined term in the WET Act, it takes on its ordinary meaning.

71AE. Substances are considered to be similar where they resemble one another in character, function and purpose, without being identical.31I

71AF. In the context of wine, different varieties of grape juice are considered to be similar substances and would be considered together for the purpose of determining whether grape juice as 'any other substance' makes up more than 1% of the total volume of the wine. Likewise, different types of flavouring (whether natural or artificial) are considered to be similar substances. Different forms of sulphites added to wine are also considered to be similar substances.

71AG. However, yeast and sulphur dioxide for example are considered to be different substances. This is because yeast is added to wine to convert sugars into alcohol and carbon dioxide, whereas sulphur dioxide is added to wine as a preservative. These substances are different in character, function and purpose.

71AH. Whether substances added to wine are similar to each other will be a question of fact in each case.

Example 10 - any other substances - not similar

71AI. Winemaker Co manufactures a Cabernet Merlot wine from a combination of grapes it grows in its vineyard, and whole fresh unprocessed grapes it purchases. During the winemaking process, Winemaker Co ferments the grapes it grew or purchased (and owned from before the time of crushing), and adds yeast, a preservative and some purchased merlot grape juice. The finished wine in its packaged branded form contains 1% purchased grape juice, 0.5% yeast and 1% preservative.

71AJ. As these additives are not considered to be similar substances, and each comprises not more than 1% of the total volume of the wine in its final packaged and branded form, they are all taken to be source product for the purpose of determining whether the 85% source product ownership rule is satisfied.

Example 11 - any other substances - similar

71AK. Vigneron Co manufactures a Grenache Shiraz Mouvedre wine, which is packaged in branded 1 litre bottles. Of the total volume of the wine:

·
  820ml originated from whole fresh unprocessed grapes owned by Vigneron Co at the commencement of the winemaking process
·
  150ml is bulk wine that was purchased by Vigneron Co
·
  10ml is unfermented Grenache grape juice
·
  10ml is unfermented Shiraz grape juice
·
  8ml is unfermented Mouvedre grape juice, and
·
  2ml is preservative.

71AL. Although the three portions of grape juice each comprise 1% or less of the total volume of the wine when considered individually, they are considered to be 'similar substances' and must therefore be considered collectively for the purpose of the deeming provisions. On the basis that the grape juices comprise 28ml (2.8%) of the total volume of the wine, the grape juices are not taken to be source product for which the producer satisfies the ownership test. However the preservative, a different substance, comprises only 0.2% of the total volume of the end product and as such is taken to be source product that satisfies the ownership test.

71AM. 82% of the final wine was derived from source product that Vigneron Co owned at all relevant times. A further 0.2% (being the preservative) is deemed to be source product that satisfies the ownership requirement. Accordingly only 82.2% of the final wine satisfies the source product ownership test. Therefore Vigneron Co does not satisfy the 85% source product ownership rule for this wine.

71AN. You must convert solid or gaseous additives to a volumetric measure to determine whether an additive is a deemed source product and therefore whether a wine satisfies the 85% source product ownership rule.31J

Example 12 - 85% source product ownership rule satisfied

71AO. WeFortify Ltd produces a fortified grape wine. Another entity manufactures the wine on behalf of WeFortify Ltd pursuant to a wine processing agreement. The wine is manufactured from whole unprocessed grapes owned by WeFortify Ltd. At no time throughout the winemaking process does ownership of the grapes or resultant wine pass from WeFortify Ltd. Each 1 litre bottle of fortified grape wine is comprised of the following:

·
  500ml originating from the grapes owned by WeFortify Ltd as whole unprocessed grapes
·
  200ml purchased brandy
·
  150ml purchased wine
·
  80ml grape juice concentrate
·
  50ml water
·
  10ml yeast, and
·
  10ml sulphur dioxide.

71AP. Fifty per cent of the product originated from whole unprocessed grapes owned by WeFortify Ltd at all relevant times and as such, 50% of the total volume of the wine is made from source product for which WeFortify Ltd satisfies the ownership test.

71AQ. The brandy, grape juice concentrate (no more than 10% of the total volume of the wine), water, and the additives (each dissimilar and comprising no more than 1% of the total volume of the wine) are taken to be source product that satisfies the ownership test. Together these substances comprise 350ml (35%) of the total volume of the wine and are taken to be source product owned by WeFortify Ltd at all relevant times.

71AR. Therefore, of the total volume of the fortified wine in its packaged, branded form, WeFortify Ltd owned 85% as source product at all relevant times.

Example 13 - 85% source product ownership rule not satisfied

71AS. OwnGrape Pty Ltd grows its own grapes, which it uses to make Sauvignon Blanc wine. Ownership of the grapes is maintained by OwnGrape Pty Ltd throughout the winemaking process, up to and including bottling. Each 1 litre bottle of wine is comprised of the following:

·
  700ml originating from grapes grown and owned by OwnGrape Pty Ltd
·
  200ml of purchased wine
·
  50ml of grape juice concentrate
·
  40ml of water, and
·
  10ml of additives (yeast, sulphur dioxide, tartaric acid).

71AT. 700ml (70%) of the total volume of the end product originated from source product owned by OwnGrape Pty Ltd at all relevant times. A further 100ml (10%), being the water, grape juice concentrate and additives, are deemed to be source product that satisfies the ownership test.

71AU. OwnGrape Pty Ltd does not satisfy the 85% source product ownership rule because only 80% of the total volume of the wine was owned by OwnGrape Pty Ltd as source product (including deemed source product). The remaining 200ml (20%) is purchased wine (a substance other than source product).

Example 14 - beverage that falls under the grape wine product definition - 85% ownership of source product rule not satisfied

71AV. GWP Ltd manufactures an alcoholic beverage that is classified as a grape wine product under the WET Act. Under the grape wine product definition, amongst other things, a beverage must contain at least 700ml of grape wine per litre (70%) grape wine.

71AW. GWP's product contains 75% grape wine. 100% of the grape wine in GWP's grape wine product originated from fresh grapes owned by GWP at all relevant times.

71AX. The remaining 25% of the total volume of GWP's grape wine product is comprised of various fruit juices, natural colours and flavouring (and each type of additive comprises greater than 1% of the final product).

71AY. Because only 75% of the total volume of the grape wine product originated from source product owned by GWP (with the remaining 25% being comprised of substances other than source product), GWP does not satisfy the 85% source product ownership rule in relation to the grape wine product.

Example 15 - grape wine product - 85% ownership not satisfied

71AZ. GWP manufactures a grape wine product. Each 1 litre bottle of grape wine product is made up of the following:

·
  950ml grape wine
·
  38ml water
·
  10ml natural fruit flavouring, and
·
  2ml preservatives.

71BA. Of the grape wine used to make the grape wine product, 750ml was made from whole unprocessed grapes.

71BB. The remaining 200ml is purchased grape wine. Therefore, of the total volume of the grape wine product, only the grape wine made from GWP's grapes, the water, the fruit flavouring and preservatives are (or are taken to be) source product that meets the ownership test. This totals only 80%, and therefore GWP does not satisfy the 85% source product ownership rule.

Transitional rules

2018 vintage wine

71BC. 2018 vintage wine is wine where more than 50% of the total volume originates from source product that was crushed (or, in the case of mead and sake, initially fermented) on or after 1 January 2018.

71BD. To be able to claim a producer rebate for 2018 vintage wine that is the subject of an assessable dealing on or after 1 January 2018, you must meet all of the eligibility criteria.31K

2017 and earlier wine - 85% source product ownership rule

71BE. In some circumstances, where you have manufactured wine before 1 January 2018, and an assessable dealing with the wine occurs in Australia on or after 1 July 2018, you will not need to satisfy the 85% source product ownership rule. That is, your ownership of the source product will be deemed.31L

71BF. However, you still need to meet all the other eligibility requirements to claim a producer rebate for the wine.

2017 and earlier wine

71BG. The 85% source product ownership rule for wine is deemed to be satisfied if you meet all of the following requirements:31M

·
 the wine was 2017 or earlier wine - that is more than 50% of the volume of the wine that is attributable to source product, must have been from source product crushed (or in the case of mead and sake, initial fermentation has commenced) before 1 January 2018
·
 the wine you sell comprises more than 50% wine that you owned immediately prior to 1 January 2018 and continued to own until the time of sale
·
 an assessable dealing occurs with the wine before 1 July 2023, and
·
 either:
-
 the wine was in a container31N before 1 July 2018, or
-
 at the time of the assessable dealing, the wine is labelled with its year of vintage.

71BH. All product derived from source product (for example, purchased wine or purchased juice) is taken into account for these rules. You are not required to meet the source product ownership rules for the purpose of this test.31O

71BI. Additionally, where you have used purchased wine to manufacture 2017 and earlier wine that is covered by these transitional provisions, you will still need to account for any earlier rebates for the purchased wine you used.31P

71BJ. Where you produce wine in New Zealand that is 2017 or earlier wine, the wine is the subject of an assessable dealing in Australia on or after 1 July 2018, and it does not meet all of the requirements in paragraph 71BG of this Ruling, you will need to meet the 85% source product ownership rules in respect of the wine before you can claim a rebate for the wine. You will also still need to meet all of the other requirements.

Example 16 - 85% source product ownership rule deemed to be satisfied for 2017 vintage wine

71BK. In January 2017, PT Wines Co purchased bulk 2017 vintage Riesling. In February 2017, PT Wines blended the purchased Riesling wine with purchased grape concentrate.

71BL. On 30 June 2018, the Riesling owned by PT Wines was held in bulk storage tanks at its winery. On 25 August 2018, PT wines bottled the Riesling, branded it with PT Wines' registered trade mark and labelled it with the 2017 vintage date.

71BM. PT Wines sold the 2017 vintage Riesling in its final packaged form to an Australian entity in September 2018. The 2017 vintage Riesling was exported to Australia in the same month. The Australian entity paid WET on the wine on importation.

71BN. More than 50% of the Riesling originated from source product that was crushed before 1 January 2018. The Riesling was owned by PT Wines immediately before 1 January 2018, and it was the subject of an assessable dealing in Australia after 1 July 2018 and before 1 July 2023. At the time of the dealing the Riesling was in a container and was labelled with the 2017 vintage date. Therefore, PT Wines will be deemed to have met the 85% source product ownership rule for the wine.

71BO. However, PT Wines will only be able to claim a rebate where it is an approved New Zealand participant and meets all of the other eligibility criteria, and in determining the amount of any rebate to which PT Wines may be entitled, it must account for any earlier rebates for the purchased wine .31Q

2017 year and earlier fortified wine

71BP. For the purposes of the transitional provisions, fortified wine refers to wine (as defined in the WET Act) that meets the requirements for fortified wine specified in the Australia New Zealand Food Standards Code. 31R Specifically, fortified wine must contain no less that 150mls of ethanol per litre, and no more than 220mls of ethanol per litre.

71BQ. You are taken to have satisfied the 85% ownership of source product rules to claim a producer rebate for fortified wine if you meet all of the following requirements:31S

·
 more than 50% of the volume of the wine that is attributable to source product, must have been from source product crushed (or in the case of mead and sake, initial fermentation has commenced) before 1 January 2018
·
 you owned the wine immediately before 1 January 2018 and maintain ownership of it until the time of an assessable dealing with the wine
·
 an assessable dealing occurs with the fortified wine on or before 1 July 2025, and
·
 on 1 January 2018, the wine was either:
-
 in the process of being manufactured into fortified wine, or
-
 already bottled fortified wine.

71BR. It is a question of fact whether wine is in the process of being manufactured into fortified wine on 1 January 2018. In the context of this provision, wine that is ageing in wood as at 1 January 2018 to impart oak characteristics for example will be considered to be undergoing 'manufacture'.31T

71BS. This transitional provision deems a producer to have satisfied the 85% source product ownership requirement for the wine provided it is sold by 30 June 2025.

71BT. There is a further transitional rule that applies to stored wine that is to undergo further manufacture prior to sale as fortified wine. A producer is deemed to have owned the source product used to make the stored wine provided the following requirements are satisfied:

·
 the wine subject to an assessable dealing is fortified wine
·
 the fortified wine was manufactured using wine that was stored in tanks or barrels (but not bottles) before 1 January 2018, and
·
 the producer of the fortified wine owned the stored wine immediately before 1 January 2018.

71BU.This transitional rule applies regardless of when your assessable dealing occurs. You will be deemed to have owned 100% of the source product used to make the stored wine that satisfies the above tests from the point of crushing. However you will still be required to satisfy the 85% source product ownership rule - so at least 85% of your final fortified wine must consist of stored wine that meets the above tests and source product that meets the ownership requirement (or inputs that are deemed to be source product that are taken to have met the ownership requirement).

71BV. Where you have used purchased wine to manufacture fortified wine that is covered by these transitional provisions, you will still need to account for any earlier rebates for the purchased wine you used.31U

Example 17 - fortified wine made from blending wines stored immediately prior to 1 January 2018

71BW. Benny's Wines owns wine stored in a series of barrels immediately before 1 January 2018. Benny blends 900 litres of the stored wine with 100 litres of wine purchased on 1 July 2030. Benny bottles the fortified wine and affixes his proprietary label. He sells the fortified wine in 2031. Benny satisfies the 85% source product ownership rule because 90% of the fortified wine he is selling was made from stored wine that he has owned from before 1 January 2018. Any producer rebate to which Benny is entitled must be reduced by any earlier rebate amounts for purchased wine.

Example 18 - blend of stored wine, wine produced by the producer after 1 January 2018 and purchased wine

71BX. Benny also blended a fortified wine in 2030 comprising:

·
  70% stored wine (that he had owned from before 1 January 2018)
·
  20% wine that he produced from grapes he owned at the time of crushing in 2030, and
·
  10% purchased wine.

71BY. In this case, he is deemed to satisfy the source product ownership rule for the 70% of the blended wine that was sourced from his stored wine (that he had owned from before 1 January 2018). He also owned the source product for the requisite time period for the 20% wine component that he made in 2030. Therefore he satisfies the source product ownership rule for 90% of the wine. Any producer rebates to which Benny is entitled must be reduced by any earlier rebate amounts for purchased wine. 31V

Example 19 - fortified wine in a solera system

71BZ. Strong Co is the producer of fortified Tawny wine. Strong Co uses a solera system at its winery to age the Tawny wine by fractional blending.

71CA. On 31 December 2017 the Tawny wine that Strong Co has ageing in the solera system in tanks and barrels is a mixture of purchased product and product that originated from grapes grown on Strong Co's vineyard. On and from 1 January 2018, all of this wine is considered to have originated from source product owned by Strong Co.

71CB. Over the following years, Strong Co bottles and sells wine from the tanks and barrels to customers in Australia and tops them up with younger wine. If this younger wine is made from grapes that Strong Co owned immediately prior to crushing, Strong Co will continue to satisfy the source product ownership rule for 100% of the wine in the tanks and barrels. However, if Strong Co adds wine to the tanks and barrels that it did not own immediately before 1 January 2018 and for which Strong Co did not own the grapes at the time of crushing, then Strong Co will need to keep details of the percentage of wine in a particular tank or barrel that satisfies the source product ownership rule. For example, if a barrel held 200 litres of pre-1 January 2018 wine, and 20 litres was drawn off and replaced with purchased wine, then 90% of the wine in the barrel will satisfy the source product ownership rule. If a further 20 litres is drawn off and replaced with purchased wine, then the percentage will drop to 81% (162 litres of the 200 litres will be pre-1 January 2018 wine and 38 litres will be purchased wine).

71CC. Any rebate Strong Co is entitled to for any wine made from pre-1 January 2018 wine must be reduced by any earlier rebate amounts for purchased wine used to manufacture the Tawny wine. 31W

Container for retail sale

71CD. You are entitled to claim a producer rebate for an assessable dealing with rebatable wine only if the wine is packaged in a container suitable for retail sale with a capacity of 5 litres or less.31X The exception to this rule is cider and perry, which may be packaged in containers (such as kegs) of 51 litres or less. This exception recognises that cider and perry are often sold on tap at retail premises.

71CE. We consider that a retail sale of wine is a sale to the end consumer.31Y Wine is packaged in a container suitable for retail sale when it is in a form that consumers would ordinarily expect to find in a retail setting, including displaying the appropriate regulatory markings (for example, complying with Label Integrity Program requirements)31Z and being branded with a trade mark (see paragraphs 71CS to 71DM of this Ruling).

71CF. This refers to containers such as bottles, casks and kegs at the stage before it is decanted into glasses or other drinking vessels in retail settings such as hotels and restaurants.

Example 20 - container for retail sale rule satisfied

71CG. NZWineCo is the producer of a Semillon Sauvignon wine. The wine is packaged in 750ml glass bottles. NZWineCo sells the wine in individual bottles, in cases of 12 bottles and by the pallet to purchasers in Australia. Each bottle is branded by WineCo's trade mark registered in New Zealand.

71CH. The label also sets out:

·
  the volume of the wine (750ml)
·
  the designation and country of origin (wine of New Zealand)
·
  alcohol content (13.5% alcohol by volume)
·
  allergens (sulphites and processing aids (milk and eggs))
·
  name and street address of the producer (including Lot number)
·
  standard drinks the bottle contains (8.3)
·
  vintage (2018)
·
  variety (Semillon Sauvignon), and
·
  region (geographical indicator).

71CI. NZWineCo's bottled Semillon Sauvignon meets the producer rebate eligibility requirement that wine must be packaged in a container with a capacity not exceeding 5 litres in a form that is suitable for retail sale.

Example 21 - size and not suitable for retail sale

71CJ. Sally Co is a producer of Shiraz wine. The wine is packaged in 1 litre bottles. Sally Co sells the bottled Shiraz in cases of six to a purchaser in Australia. The bottles are not labelled, but a label affixed to each carton sets out the origin, grape variety, alcohol content and Sally Co's street address.

71CK. As the labels are not on each bottle and do not set out all of the information a purchaser at the retail level would ordinarily expect to see, Sally Co's Shiraz wine does not meet the packaging requirements and Sally Co is not able to claim a producer rebate in relation to the Shiraz.

Bulk wine exported to Australia where it is bottled, labelled and sold

71CL. You may be able to claim a producer rebate for wine you have manufactured in New Zealand where:

·
 you export the wine to Australia in bulk containers (that is, a container with a capacity of greater than 5 litres (or greater than 51 litres for cider or perry)
·
 the bulk wine is packaged and labelled in Australia in accordance with the packaging requirements explained at paragraphs 71CD to 71CF of this Ruling, and the branding requirements
·
 you still own the wine during the packaging and labelling process, and
·
 the wine is packaged and labelled in accordance with the packaging and branding requirements at the time it is the subject of an assessable dealing in respect of which WET is paid in Australia.

71CM. The circumstances set out in paragraph 71CC of this Ruling are the only circumstances in which a producer of wine in New Zealand could export bulk wine to Australia and still be eligible for a producer rebate.

71CN In these circumstances you must make sure that the approved selling price on which the rebate is calculated appropriately excludes the costs (of freight, packaging and labelling, for example) unrelated to the production of the wine in New Zealand. Refer to paragraphs 84 to 86 of this Ruling for a discussion about the 'approved selling price'.

Example 22 - bulk wine packaged in Australia

71CO. NZ Wine Co manufactures Sauvignon Blanc wine in New Zealand and exports the wine to Australia in isotankers.

71CP. An Australian entity bottles and labels the Sauvignon Blanc wine with NZ Wine Co's registered trade mark while NZ Wine Co retains ownership of the wine, and all other regulatory requirements pertaining to the labelling of imported wine in Australia are also met. The Australian entity does not undertake any further manufacture in relation to the imported wine.

71CQ. NZ Wine Co then sells the bottled and labelled wine to restaurants and bottle shops in Australia for a price that includes WET.

71CR. As the wine is packaged at the time of the assessable dealing with the wine for which it pays WET, NZ Wine Co satisfies the packaging requirements for the purposes of claiming the rebate.

Branded with a trade mark

71CS. To claim a rebate for an assessable dealing with wine, the container that holds the wine at the time of the assessable dealing must be branded with a trade mark that:31AA

·
 identifies or can be readily associated with you as the producer of the wine
·
 is owned by you or an entity that is associated with you (as determined under paragraph 19-20(1)(a), the first limb of the associated producer provisions)
·
 is a trade mark within the meaning of the Trade Marks Act 2002 (New Zealand), and
·
 satisfies any one of the following requirements:
-
 is a registered trade mark within the meaning of the Trade Marks Act 2002 (New Zealand)
-
 an application to register the trade mark has been made under the Trade Marks Act 2002 (New Zealand) which satisfies the requirements under that Act for the application to be pending, or
-
 you have used the trade mark throughout the period beginning on 1 July 2015 and ending at the time of the assessable dealing.

71CT. The container that holds the wine will be 'branded' with the trade mark where it appears on the container that immediately holds the wine. It is not sufficient for the trade mark to appear on a carton that holds 'cleanskin' bottles of wine. The labels on the bottles themselves must bear the trade mark. With regard to cask wine, although the wine itself is contained in a bladder within a box, it is sufficient that the box itself bear the trade mark as the bladder and box collectively form the container that holds the wine.

What is a trade mark?

71CU. Your trade mark must be a 'trade mark' within the meaning of the Trade Marks Act 2002 (New Zealand). The term 'trade mark', as defined in section 5 of that Act:

(a)
  means any sign capable of -
(i)
  being represented graphically; and
(ii)
  distinguishing the goods or services of one person from those of another person; and
(b)
  includes, -
(i)
  except in section 85, a certification trade mark; and
(ii)
  except in section 85, a collective trade mark.

71CV. Under section 5 of the Trade Marks Act 2002 (New Zealand) a 'sign' includes a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket or word, or any combination of signs.

'Identifies' or 'readily associated with' you

71CW. The trade mark on the retail container must 'identify' or be 'readily associated with' you as the producer of the wine.31AB

71CX. Whether a trade mark identifies or can be readily associated with you, as the producer of the wine, will be a question of fact in each case. However, generally, where you can be identified as the owner of the trade mark affixed to the container that holds the wine, it is considered the trade mark can be readily associated with you.

71CY. The trade mark requirement does not mean that you are required to own a different trade mark for each range or collection of wine you produce. The trade mark requirement operates at the entity level. However, it does not necessarily prevent you from having and using more than one trade mark and still meeting the trade mark requirements.

71CZ Where co-branding arrangements exist, and the retail packaging is branded with multiple trade marks, we consider a producer may still be able to claim a rebate where its trade mark is dominant on the retail packaging. This will be a question of fact.

Example 23 - trade mark that identifies the producer

71DA. NZ Golden Vines is a producer of wine in New Zealand. NZ Golden Vines has registered a label with the imprint of a golden vine and its name as a trade mark.

71DB. NZ Golden Vines sells three different ranges of wine, catering to different markets. NZ Golden Vines has a budget range, a mid-tier range, and a premium range. The ranges are called Stringy Vine, NZ Gold, and The Platinum Series respectively, with the name of the range featuring prominently on the front label of each 750ml bottle of wine. None of the ranges have trade marks registered in respect of them.

71DC. NZ Golden Vines affixes the imprint of the golden vine (registered trade mark) to each bottle of wine it sells in all of its ranges. Because the imprint identifies NZ Golden Vines as the producer of each bottle of wine it sells, it meets the trade mark requirement and it is not required to register trade marks in respect of each range.

Ownership of the trade mark

71DD. You, or an entity associated with you, must own the trade mark.31AC

71DE. An entity will be associated with you if, assuming it were a producer (regardless of whether it is in fact a producer), it would be an associated producer of yours under paragraph 19-20(1)(a); the first limb of the associated producer provisions of WET Act. Refer to paragraphs 73 to 74C of this Ruling, which explain when and how entities are determined to be associated producers under this paragraph.

71DF. We consider that ownership of a trade mark refers to the right to use the trade mark to the exclusion of all other entities, and does not include the exclusive use of a trade mark under a licence or other permission. Whether you (or an associated entity) own a trade mark will be a question of fact in each case. However, indicators that you own a trade mark include:

·
 you are registered as the owner of the trade mark with the Intellectual Property Office of New Zealand
·
 you have the right to sell, license, or mortgage the trade mark, and
·
 you can take legal action against third parties for infringement against the trade mark.

Registered trade mark

71DG. A trade mark is registered if it is registered under the Trade Marks Act 2002 (New Zealand) with the Intellectual Property Office of New Zealand.31AD

Example 24 - registered trade mark

71DH. SFWines Co is the producer of strawberry fruit wine which it sells in 750ml bottles. SFWines Co has registered the trade mark, 'StrawberryFieldz Wines' with the Intellectual Property Office of New Zealand and SFWines Co is the sole owner of the trade mark.

71DI. Each bottle of SFWines Co's wine has a label affixed to it on the front and back of the bottle. The trade mark, 'StrawberryFieldz Wines(r)' is prominently displayed on the label on the front of the bottle and in smaller writing on the back. As such, SFWines Co meets the producer rebate trade mark requirements.

Application pending

71DJ. For the purposes of the producer rebate, we consider that an application for a New Zealand trade mark satisfies the requirements of subparagraph 19-5(7)(f)(iv) from the time the application is filed until any of the following occurs:

·
 the application is abandoned or withdrawn
·
 the Commissioner of the Intellectual Property Office of New Zealand rejects the application to register the trade mark and either:
-
 there is no appeal against the decision, or the period allowed for the appeal has ended, or
-
 the decision is appealed and the decision to refuse registration is upheld
·
 the trade mark is registered under the Trade Marks Act 2002 (New Zealand) with the Intellectual Property Office of New Zealand.31AE

In use since 1 July 2015

71DK. You will meet the trade mark requirement where you can show that you have used the trade mark, such as an unregistered trade mark, throughout the period beginning 1 July 2015, and ending at the time of the assessable dealing on which WET is paid in Australia. Whether you have used a trade mark during that time will be a question of fact in each case.

71DL. The following factors may be indicative of whether you have used an unregistered trade mark:

·
 you can provide details of the specific goods or services sold using the trade mark during the relevant time
·
 you can provide historical context about your use of the trade mark, including the reason for choosing the trade mark, when you first started using the trade mark, whether it has been used continuously, and if not, when and for how long it was used
·
 advertising and marketing material, photographs of signage, or other images that show your use of the trade mark, and
·
 whether there has been any confusion or dispute in relation to the trade mark and how it was resolved.

71DM. Note however that even an unregistered trade mark that has been used by the producer since 1 July 2015 to the time of the assessable dealing must be 'owned' by the producer (or an associate). It is accepted that trade marks that you have used since 1 July 2015 are 'owned' by you, provided no-one else owns that trade mark.

(b) At the end of new paragraph 71A, insert footnote 31A:

31A Paragraph 19-5(2)(e).

(c) At the end of new paragraph 71D, insert footnote 31B:

31B Paragraph 1.16 of Explanatory Memorandum to Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(d) At the end of the second sentence in new paragraph 71R, insert footnote 31C:

31C Subsections 19-5(5) and (6).

(e) At the end of the fourth dot point in new paragraph 71R, insert footnote 31D:

31D Refer to subsections 31-4(b), 31-5(b), 31-6(b) and 31-7(b).

(f) After the first instance of 'wine' in the sixth dot point in new paragraph 71R, insert footnote 31E:

31E For the purposes of clarity, this includes grape concentrate that you have caused to be added to the wine where you have wine made under contract on your behalf.

(g) After the first instance of 'wine' in the seventh dot point in new paragraph 71R, insert footnote 31F:

31F For the purposes of clarity, this includes any other substance that you have caused to be added to the wine where you have wine made under contract on your behalf.

(h) At the end of new paragraph 71AA, insert footnote 31G:

31G Paragraph 1.21 of Explanatory Memorandum to Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(i) At the end of the first sentence in new paragraph 71AB, insert footnote 31H:

31H Refer to Appendix 1 of this Ruling.

(j) At the end of new paragraph 71AE, insert footnote 31I:

31I Refer to GSTR 2003/5.

(k) At the end of new paragraph 71AN, insert footnote 31J:

31J Paragraph 1.20 of Explanatory Memorandum to Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(l) At the end of new paragraph 71BD, insert footnote 31K:

31K Subsection 19(2) of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017. Producer rebates for 2018 vintage wine are not subject to the earlier producer rebate rules.

(m) At the end of new paragraph 71BE, insert footnote 31L:

31L Subsection 20(1) of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(n) At the end of the introductory sentence in new paragraph 71BG, insert footnote 31M:

31M Section 20 of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(o) After 'container' in the first sub point of the fourth dot point in new paragraph 71BG, insert footnote 31N:

31N We consider a container in these circumstances to be a container that meets the packaging and branding requirements explained at paragraphs 71CD to 71DM of this Ruling.

(p) At the end of new paragraph 71BH, insert footnote 31O:

31O Paragraph 1.68 of Explanatory Memorandum to Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(q) At the end of new paragraph 71BI, insert footnote 31P:

31P Subsection 20(5) of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017. Refer also to our website for a general discussion about how the earlier producer rebate provisions operate - https://www.ato.gov.au/Business/Wine-equalisation-tax/Producer-rebate/Earlier-producer-rebate-amounts/.

(r) At the end of new paragraph 71BO, insert footnote 31Q:

31Q Refer to our website for a general discussion about how the earlier producer rebate provisions operate - https://www.ato.gov.au/Business/Wine-equalisation-tax/Producer-rebate/Earlier-producer-rebate-amounts/.

(s) At the end of the first sentence in new paragraph 71BP, insert footnote 31R:

31R Section 22 of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017. Refer to Standard 4.5.1 - Wine Production Requirements as made under section 92 of the Food Standards Australia New Zealand Act 1991.

(t) At the end of the introductory sentence in new paragraph 71BQ, insert footnote 31S:

31S Section 20 of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(u) At the end of new paragraph 71BR, insert footnote 31T:

31T Refer to paragraph 1.75 of the Explanatory Memorandum to the Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(v) At the end of new paragraph 71BV, insert footnote 31U:

31U Subsection 20(5) of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017. Refer also to our website for a general discussion about how the earlier producer rebate provisions operate - https://www.ato.gov.au/Business/Wine-equalisation-tax/Producer-rebate/Earlier-producer-rebate-amounts/.

(w) At the end of new paragraph 71BY, insert footnote 31V:

31V Subsection 21(3) of the Treasury Laws Amendment (2017 Measures No. 4) Act 2017.

(x) At the end of new paragraph 71CC, insert footnote 31W:

31W Refer to our website for a general discussion about how the earlier producer rebate provisions operate - https://www.ato.gov.au/Business/Wine-equalisation-tax/Producer-rebate/Earlier-producer-rebate-amounts/.

(y) At the end of the first sentence in new paragraph 71CD, insert footnote 31X:

31X Subsection 19-5(7).

(z) At the end of the first sentence in new paragraph 71CE, insert footnote 31Y:

31Y Refer to the definition of 'retail sale' in section 33-1.

(aa) After 'Label Integrity Program requirements)' in new paragraph 71CE, insert footnote 31Z:

31Z For example, grape wine labels are governed by the Australian Grape and Wine Authority Act 2013 and Regulations, the Food Standards Code, National Trade Measurement Regulations 2009, the Competition and Consumer Act 2010 and State Consumer Laws.

(bb) At the end of the introductory sentence in new paragraph 71CS, insert footnote 31AA:

31AA Paragraphs 19-5(7)(b)-(f) inclusive.

(cc) At the end of new paragraph 71CW, insert footnote 31AB:

31AB Paragraph 19-5(7)(c).

(dd) At the end of new paragraph 71DD, insert footnote 31AC:

31AC Paragraph 19-5(7)(d).

(ee) At the end of new paragraph 71DG, insert footnote 31AD:

31AD For further information refer to www.iponz.govt.nz.

(ff) At the end of new paragraph 71DJ, insert footnote 31AE:

31AE For further information refer to www.iponz.govt.nz.

50. Paragraph 72

(a) Omit the paragraph (including footnote 32, but excluding footnote 33); substitute:

72. From 1 July 2018, the maximum amount of producer rebate for a financial year is $350,000. The maximum entitlement for associated producers as a group for each financial year from 1 July 2018 is $350,000.33

(b) Omit wording of footnote 33, substitute:

32. Subsections 19-15(2) and (3). Refer to paragraphs 73 to 74C of this Ruling for a discussion about when producers will be associated.

51. Paragraph 73

(a) Omit the paragraph (including footnote 34, but excluding footnotes 35 and 36); substitute:

73. From 1 July 2018, you are an associated producer of another producer for a financial year if, at any time during the financial year:33A

·
 you are 'connected with' each other. You are connected with each other if you would be 'connected with' each other under section 328-125 of the Income Tax Assessment Act 1997 (ITAA 1997) if subsection 328-125(8) of the ITAA 1997 were omitted35, or
·
 one of you is under an obligation (formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the other in relation to your financial affairs.36

(b) At the end of the introductory sentence, insert footnote 33A:

33A Subsection 19-20(1).

52. Paragraph 73A

Omit the paragraph (excluding footnote 37); substitute:

73A. You are an associated producer of another producer if:

·
 each of you is under an obligation (formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the same third entity in relation to your financial affairs.37

53. Paragraph 73B

(a) Omit the paragraph (excluding footnote 38); substitute:

73B. Further, you (first producer) are an associated producer of another producer (second producer) if:

·
 you are under an obligation (formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of a third producer and the third producer is under an obligation (formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the second producer in relation to their financial affairs.38

(b) After the paragraph, insert new paragraph 73C:

73C. The term 'financial affairs' in the associated producer provisions refers to the business and financial affairs of your wine production business or the wine production business of the other producer(s).38AA

(c) At the end of new paragraph 73C, insert footnote 38AA:

38AA SJ Buller Pty Ltd and Commissioner of Taxation [2013] AATA 617.

54. Paragraph 74

Omit the paragraph; substitute:

74. You may be associated with one or more producers of wine in New Zealand, one or more Australian producers or one or more New Zealand and Australian producers.

55. Paragraphs 74A, 74B and headings

(a) Omit the paragraphs, headings and footnotes 38A to 38E.

(b) After the omitted paragraphs, insert new paragraph 74C:

74C. For the 2017-18 financial year, you are an associated producer of another producer for the financial year if, at any time between 1 October 2017 and 30 June 2018, you meet any of the tests set out in paragraphs 73 to 73B of this Ruling.

56. Paragraphs 75 to 81 and headings

Omit the paragraphs, headings and footnotes 39 to 44F.

57. Paragraph 83 heading

Omit the heading; substitute 'Example 25 - approved selling price'.

58. Paragraph 84

(a) Omit the paragraph (excluding footnote 45); substitute:

84. The approved selling price of the wine means the price you sell the wine for excluding any expenses unrelated to the production of the wine in New Zealand.45

(b) After the paragraph, insert new paragraph 84A:

84A. We consider this to mean that if you have incurred any such expenses, the approved selling price must be reduced by the amount of those expenses. If another entity (for example the importer) has incurred these expenses, you are not required to reduce the selling price in respect of these amounts.

59. Paragraph 85

Omit the paragraph (excluding footnotes); substitute:

85. We consider that 'expenses unrelated to the production of the wine in New Zealand' are those expenses incurred by you that would not be incurred if the wine had been produced in Australia. These expenses may include costs associated with the exportation of wine from New Zealand and the importation of the wine into Australia such as:

·
 transportation
·
 freight
·
 insurance
·
 agent's fees46
·
 New Zealand or Australian taxes including customs duties47, and
·
 foreign exchange and currency hedging costs.

60. Paragraph 86

(a) Omit the heading; substitute 'Example 26 - costs excluded from approved selling price'.

(b) In footnote 48 omit '93-101'; substitute '93 to 101'.

61. Paragraph 87

Omit the first sentence; substitute 'Your selling price can be affected by trade incentives allowed to your customers.'

62. Paragraph 88

Omit the four dot points; substitute:

·
 circumstances surrounding the provision of the incentive
·
 the accounting treatment of the incentive in the financial records of both you and your customer
·
 the terms of trade between you and your customer and other sales documentation, such as invoices, incentive claim forms and credit notes, and
·
 an objective assessment of your intention and the intention of your customer.

63. Paragraph 90

Omit the paragraph; substitute

90. If you have allowed volume rebates or discounts which effectively reduce the price for which your wine is sold, you will need to account for these volume rebates or discounts when calculating your approved selling price of the wine.

64. Paragraphs 92A to 92P

Omit the paragraphs, headings and footnotes 48A to 48H.

65. Paragraph 93

(a) Omit the paragraph (including footnote 51, but excluding footnotes 49 and 50); substitute:

93. Components that make up your approved selling price that are not expressed in Australian currency are to be treated as if they are amounts of Australian currency49 worked out according to the Commissioner's Determination.50

(b) In footnote 50, omit the wording; substitute:

50 Wine Equalisation Tax New Zealand Producer Rebate Foreign Exchange Conversion Determination (No.57) 2016 - https://www.legislation.gov.au/Details/F2016L01256.

66. Paragraph 94

In the first sentence, omit 'New Zealand participants'; substitute 'you'.

67. Paragraph 95

(a) In the first sentence, after 'option is', omit 'to be'.

(b) In the first sentence, after 'inverse of', omit 'the New Zealand participant's'; substitute 'your'.

68. Paragraph 96

Omit the paragraph (including footnotes 52 and 53); substitute:

96. Your particular exchange rate will be either:

·
 the foreign exchange rate calculated by the Reserve Bank of Australia, or
·
 the foreign exchange rate agreed to between you and the recipient of the wine.

69. Paragraph 97

Omit the paragraph; substitute:

97. The conversion day is the day you use to convert foreign currency into Australian currency. This date is the earlier of:

·
 the day on which you receive any of the consideration for the supply of the wine, or
·
 the date the invoice is issued for that supply.

70. Paragraph 98

(a) In the first sentence, omit 'Approved New Zealand participants'; substitute 'You'.

(b) In the second sentence, omit 'to be'.

(c) Omit footnote 54.

71. Paragraph 99

Omit the paragraph; substitute:

99. The average yearly RBNZ rate is the total of the RBNZ average monthly exchange rates for the financial year in which the conversion day occurs, divided by twelve. The ATO publishes the average RBNZ on its website www.ato.gov.au for each financial year.

72. Paragraph 100

(a) Omit the paragraph (excluding footnote 55); substitute:

100. Whichever foreign exchange rate you choose, you must apply that method consistently.55 We consider that you apply a method consistently if you use the same method for calculations for a financial year. If you switch methods with a view to maximising the producer rebate claim for a financial year, we consider you are using the method inconsistently and have therefore not complied with the requirements of the Determination. In these circumstances, you may have overstated your rebate claim for a financial year.

(b) Omit the wording of footnote 55; substitute:

55 Paragraph 6 of Wine Equalisation Tax New Zealand Producer Rebate Foreign Exchange Conversion Determination (No.57) 2016 - https://www.legislation.gov.au/Details/F2016L01256.

73. Paragraph 101

Omit 'Appendix C'; substitute 'Appendix 3'.

74. Paragraph 102 and headings

Omit the paragraph, heading and footnote 56.

75. Paragraph 103

(a) Omit the paragraph; substitute:

103. Rebate claims must be accompanied by any supporting evidence the Commissioner requires.56A

(b) At the end of the paragraph, insert footnote 56A:

56A Subsection 17-10(2A).

76. Paragraph 104

(a) Omit the paragraph; substitute:

104. You are only entitled to claim the rebate for wine you have produced in New Zealand and exported to Australia if WET was paid on the wine. Of the total volume of the wine, you must satisfy the source product ownership rule and meet the packaging and labelling requirements.56B

(b) At the end of the paragraph, insert footnote 56B:

56B Subsection 19-5(2).

(c) After the paragraph, insert paragraph 104A:

104A. The Commissioner requires that you provide the following original supporting documentation with the claim, or copies where it is not possible to obtain originals. These documents will be returned to you after the claim has been processed.

77. Paragraph 105

(a) In the first sentence omit 'a New Zealand participant has'; substitute 'you have'.

(b) Omit the first dot point; substitute 'your New Zealand sales invoices and'.

(c) In the first sub point of the third dot point omit 'wine tax'; substitute 'WET'.

(d) In footnote 57, omit 'Appendix D'; substitute 'Appendix 4'.

(e) Omit all semi-colons, substitute a comma.

78. Paragraph 106

(a) In the first sentence omit 'If a New Zealand participant has'; substitute 'If you have'.

(b) Omit the first dot point; substitute 'your sales invoices'.

(c) At the start of second dot point omit 'New Zealand'.

(d) In the first subset of the fourth dot point, after 'customs entry)', insert a comma.

(e) In the second subset of the fourth dot point, after 'statements, insert a comma.

(f) In footnote 58, omit 'Appendix D'; substitute 'Appendix 4'.

(h) Omit all semi-colons.

79. Paragraph 107

Omit the paragraph; substitute

107. If you have imported the wine into Australia and sold the wine in Australia, the supporting documentation must include:

·
 New Zealand customs export entries as evidence of the export of the wine from New Zealand, and
·
 Australian customs import entry numbers as evidence of the importation of the wine to Australia, and either:
-
 your Australian tax invoices (to substantiate that WET has been charged or included in a taxable dealing with wine that is not a customs entry), or
-
 if the wine is taxed at the customs barrier, the Australian customs import entry numbers (to substantiate a local entry), and
·
 a worksheet showing how the rebate claim has been calculated.

80. Paragraph 108

(a) Omit the paragraph (excluding footnote 59); substitute:

108. If you are claiming rebates on wine sold by an Australian distributor, other than the importer, on the basis that the distributor has paid WET on the wine (the wine not having been subject to WET prior to the sale by the distributor), the following additional documentation is required:

·
 the distributor's purchase invoice of the wine, and either:
-
 the distributor's Australian tax invoices (to substantiate that WET has been charged or included in a taxable dealing with the wine by the distributor), or
-
 wholesaler's statement59 from the distributor.

(b) In footnote 59, omit 'Appendix D'; substitute 'Appendix 4'.

81. Paragraphs 109 to 118 and headings

(a) Omit the paragraphs, headings, and footnotes 60 to 66.

(b) After the omitted paragraphs, insert new heading 'Date of effect'.

(b) After new heading, insert new paragraph 118A and signature block:

118A. This Ruling applies both before and after its date of issue. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10 Public Rulings ).

Commissioner of Taxation

22 November 2006

82. Paragraph 119

Omit the paragraph, heading, following signature block and references.

83. Appendix A

(a) Omit heading 'Appendix A'; substitute 'Appendix 1'.

(b) Omit heading 'Wine Equalisation Tax; substitute 'Rebatable wine'.

(c) Insert paragraph number 118B.

(c) In the third sentence, omit 'The wine equalisation tax'; substitute 'WET'.

(d) Omit the table; substitute:

Definitions Examples
Grape wine

Grape wine is a beverage that:

·
  is the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes, and
·
  does not contain more than 22% of ethyl alcohol by volume.

Note: A beverage does not cease to be the product of the complete or partial fermentation of fresh grapes or products derived solely from fresh grapes merely because grape spirit, brandy, or both grape spirit and brandy have been added to it.

Grape wine includes:
·
 table wines (red, white and rosé)
·
 sparkling wines
·
 fortified wines, and
·
 dessert wines.
Grape wine products

Grape wine product is a beverage that:

·
  contains at least 70% grape wine, and
·
  has not had added to it any ethyl alcohol from any other source, except
a)
  grape spirit, or
b)
  alcohol used in preparing vegetable extracts (including spices, herbs and grasses) where the alcohol:

·
  is only used to extract flavours from vegetable matter
·
  is essential to the extraction process, and
·
  adds no more than one percentage point to the overall alcoholic strength by volume of the beverage, and
·
  has not had added to it the flavour of any alcoholic beverage (other than wine), whether the flavour is natural or artificial, and
·
  contains between 8% and 22% (inclusive) of ethyl alcohol by volume.
Grape wine products include:
·
 vermouth
·
 marsala
·
 green ginger wine (except green ginger wine with spirits such as scotch added)
·
 wine-based cocktails and creams that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial, and
·
 imitation liqueurs (wine based) that do not contain the flavour of any alcoholic beverage (other than wine) whether the flavour is natural or artificial
·
 but only where they satisfy the requirements in the column on the left.

Grape wine products do not include:

·
 wine coolers (unless they satisfy the requirements in the column on the left)
·
 ready to drink (RTD) or designer drinks that contain a wine base (unless they satisfy the requirements in the column on the left)
·
 RTDs or designer drinks that contain spirits (other than grape spirit), and
·
 spirit-based (other than grape spirit) cocktails, creams and liqueurs.
Fruit or vegetable wine

Fruit or vegetable wine is a beverage that:

·
  is the product of the complete or partial fermentation of the juice or must of fruit or vegetables, or products derived solely from fruit or vegetables
·
  has not had added to it any ethyl alcohol from any other source except grape spirit or neutral spirit
·
  has not had added to it any liquor or substance that gives colour or flavour except grape spirit or neutral spirit, and
·
  contains between 8% and 22% (inclusive) of ethyl alcohol by volume or if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume ( Note: a product is only a fruit or vegetable wine after the addition of grape spirit or neutral spirit if that product met the definition of fruit or vegetable wine before the spirit was added).

Fruit or vegetable wines include:

·
 table wine
·
 sparkling wine, and
·
 fortified wine.

Fruit or vegetable wines do not include:

·
 RTD or designer drinks that may contain alcohol fermented from fruits such as lemons, oranges etc. (unless they satisfy the requirements in the column on the left).
Cider and perry

Cider or perry is a beverage that:

·
  is the product of the complete or partial fermentation of the juice or must of apples or pears
·
  has not had added to it any ethyl alcohol from any other source, and
·
  has not had added to it any liquor or substance (other than water or the juice or must of apples or pears) that gives colour or flavour.
Cider and perry include:
·
 traditional cider and perry
·
 draught cider and perry
·
 dry cider and perry, and
·
 sweet cider and perry.

Cider and perry do not include:

·
 cider or perry that has had lemon, black currant or other fruit flavourings added, and
·
 cider or perry that has had cola or other flavourings added.
Mead

Mead is a beverage that:

·
  is the product of the complete or partial fermentation of honey
·
  has not had added any ethyl alcohol from any other source, except grape spirit or neutral spirit
·
  has not had added to it any liquor or substance that gives colour or flavour other than:
·
  grape spirit or neutral spirit
·
  honey, herbs and spices, all of which can be added at any time
·
  caramel, provided it is added after the fermentation process is complete
·
  fruit or product derived entirely from fruit, provided:
·
 
·
  the fruit or product has not been fermented
·
  the fruit or product is added to the mead before fermentation of the mead

after the addition of the fruit or product and before fermentation the mead contains not less than 14% by volume of honey and not more than 30% by volume of the fruit or product

if fruit or product is added the mead contains between 8% and 22% (inclusive) of ethyl alcohol by volume, and if grape spirit or neutral spirit has been added contains between 15% and 22% (inclusive) of ethyl alcohol by volume. However, grape spirit or neutral spirit can only be added if the beverage meets the definition of mead before the grape spirit or neutral spirit is added.

Note: If fruit or product derived from fruit is added and it contains concentrated fruit juice or fruit pulp, the proportion of fruit or product in the mead is worked out by assuming that it has been reconstituted according to the recommendations of the manufacturer of the concentrated fruit juice or pulp.

Mead includes:
·
 honey mead
·
 fortified mead
·
 liqueur mead, and
·
 spiced mead.
Sake

Sake is a beverage that:

·
  is the product of the complete or partial fermentation of rice
·
  has not had added to it any ethyl alcohol from any other source, and
·
  has not had added to it any liquor or substance that gives colour or flavour.
Sake includes:
·
 fermented sake, and
·
 rice wine.

Distilled sake does not satisfy the definition and is not included.

84. Appendix B

Omit Appendix B; substitute:

Appendix 2 - Compliance guide
___________________________________________________________________________________________

Exclamation This Appendix contains information to assist taxpayers in complying with relevant tax laws. Provided you follow the advice in this appendix in good faith and consistently with the ruling section, the Commissioner will administer the law in accordance with this guide.

Approval or refusal of application - New Zealand participant

118C. If the Commissioner is satisfied that you are the producer of rebatable wine in New Zealand that has been or is likely to be exported to Australia, you will be approved as a New Zealand participant. You will be given written notice of the approval, including the date from which the approval has effect.

118D. You may request that the date of approval be backdated.

Example 27 - approval backdated

118E. NZ Wines is a producer of wine in New Zealand. After receiving an order from a wholesale distributor in Australia, NZ Wines recently exported a number of cases of bottled wine to Australia. The wholesale distributor provided a quotation to the Department of Home Affairs upon entering the wine into Australia.

118F. Until receiving the order from the Australian distributor, NZ Wines sold its wine exclusively in New Zealand and had not anticipated exporting wine to Australia. As such, NZ Wines was not an approved New Zealand participant when the wine was exported.

118G. As the wine has been exported to Australia, NZ Wines can apply for approval as a New Zealand participant and have the date of effect of the approval backdated to the date the wine was exported.

118H. If you are not satisfied with the Commissioner's decision on the date of effect, you may have the decision reviewed.

118I. If the Commissioner is not satisfied that you are the producer of rebatable wine in New Zealand that has been or is likely to be exported to Australia, you will not be approved as a New Zealand participant. In these circumstances, you will be given written notice of the refusal, including the reasons for the decision. Refusing to approve an entity as a New Zealand participant is also a reviewable decision.

Revocation of approval as New Zealand participant

118J. You must notify the Commissioner in writing if you no longer meet the eligibility criteria for approval as a New Zealand participant due to a change in your circumstances, for example, if you are no longer a producer of rebatable wine in New Zealand. The notification must occur within 21 days of the change in circumstances. Upon notifying the Commissioner of the change in circumstances the approval will be revoked. You will be notified of such a revocation in writing, including the date from which the revocation has effect.

118K. If at any time the Commissioner becomes aware that you no longer meet the requirements for approval as a New Zealand participant, the approval will be revoked. You will be notified of such a revocation in writing, including the date from which the revocation has effect and the reasons for the revocation.

118L. Revocation and the date of revocation of approval as a New Zealand participant are also reviewable decisions.

How do you claim the producer rebate?

Approved form

118M. You claim the producer rebate using the approved form, which is sent to the ATO. However, to streamline the claim process, you can send claim forms and supporting documentation to New Zealand Inland Revenue, which will send the claim forms to the ATO. Claim forms and supporting documentation sent to New Zealand Inland Revenue will be taken to have been lodged with the Commissioner on the day they are received by New Zealand Inland Revenue. More information about the form and how to lodge it, is available from New Zealand Inland Revenue, or its website www.ird.govt.nz

Timing

118N. Although entitlement to the rebate arises in respect of an eligible taxable dealing immediately before the end of the financial year in which the dealing occurs, the WET Act states that the Commissioner may determine, by legislative instrument, when claims for the rebate may actually be made.

118O. In accordance with the Commissioner's Determination, you may claim the producer rebate using the approved claim form and with the relevant substantiating documents after the end of the financial year in which entitlement to the rebate arises.

118P. The producer rebate claim must be made within four years of the time when the rebate entitlement arises.

118Q. You can make a claim for more than one financial year on the same claim form provided it is after those financial years have ended.

118R. If the claim is disallowed:

·
 the Commissioner can decide to disallow in whole, or in part, your rebate claim. In the event a claim is disallowed, the Commissioner must notify you of this in writing.
·
 disallowance of a claim for the rebate either in whole, or in part, is a reviewable wine tax decision in accordance with section 111-50 of Schedule 1 to the TAA.

What happens if the producer rebate is claimed when it should not have been claimed or when it is over-claimed

Not entitled to the producer rebate

118S. If you have been paid a rebate you are not entitled to, in whole or in part, you should arrange to pay the amount you are not entitled to by contacting New Zealand Inland Revenue, who will refer the details to the ATO. If payment is not made, the Commissioner will seek to recover the debt.

118S. Circumstances where an entity is not entitled to a rebate include the following:

·
 you did not produce the wine in New Zealand
·
 the wine was not exported to Australia
·
 WET was not paid on the wine
·
 you did not own the source product for at least 85% of the total volume of the wine throughout the period starting immediately prior to crushing (or immediately prior to fermentation in the case of mead and sake) and ending when the wine is placed in a container meeting the packaging and labelling requirements
·
 the wine did not meet the packaging and labelling requirements when it was the subject of a dealing on which WET was paid, and
·
 you calculated the amount of producer rebate incorrectly.

Excess claim - single producer

118U. If you claim amounts of producer rebate to which you are entitled under subsection 19-5(2), and then ascertain that the total amount you have claimed exceeds the amount to which you are entitled for a financial year, you are liable to pay to the ATO an amount equal to that excess.

118V. Therefore where you are not an associated producer, you can correct an excess claim by arranging to pay an amount equal to the excess. You can do this by contacting New Zealand Inland Revenue, who will refer the details to the ATO.

118W. However, if the Commissioner discovers the excess claim (for example through compliance activity) and you have not corrected the excess claim, then the Commissioner will seek to recover the excess amount.

Excess claim - associated producer

118X. If you are a member of a group of associated producers and the rebate claimed by the group for a financial year is more than the maximum amount of producer rebates to which the group is entitled for the financial year, each member of the group is jointly and severally liable to pay an amount equal to the excess. However, you will not be liable to pay an amount that exceeds the sum of the amounts of producer rebate that you claimed for the financial year.

118Y. One or more members of the group must correct the excess claim by arranging to pay an amount equal to the excess. They can do this by contacting New Zealand Inland Revenue, who will refer the details to the ATO.

118Z. However, if the Commissioner discovers the excess claim (for example through compliance activity) and it has not been corrected by one or more members of the group, the Commissioner will seek to recover the excess claim from the group (if appropriate), as each producer member is jointly and severally liable to pay an amount equal to the excess. The excess amount will be recovered as a debt to which the General Interest Charge (GIC) will apply (see further paragraph 118AD of Appendix 2 of this Ruling).

Impact of volume rebates and discounts

118AA. If you have allowed volume rebates or discounts which effectively reduce the price for which wine is sold (see paragraphs 87 to 90 of this Ruling and paragraphs 118 to 122 of WETR 2009/1) and the volume rebate or discount has not been factored into the calculation of the producer rebate you have been paid, you will need to adjust your producer rebate accordingly.

118AB. Consistent with other amounts you have claimed in excess, in these circumstances, you should arrange to pay an amount equal to the incorrect amount claimed by contacting New Zealand Inland Revenue to refer the details to the ATO (and if payment is not made, the Commissioner will seek to recover the debt).

118AC. If any amount of the excess claimed or amounts claimed which should not have been claimed remains unpaid after the time by which it is due to be paid, you will also be liable to the GIC on the unpaid amount. The GIC will continue to accrue on a daily compounding basis up to and including the end of the last day on which the excess and the GIC on the excess claim remains unpaid.

A$200 exclusion

118AD. You cannot claim a producer rebate for an amount totalling less than A$200. However, claims may be aggregated to reach the A$200 minimum amount. This is also subject to the four year time period referred to in paragraph 118Q of Appendix 2 of this ruling.

What records do you need to keep and how long do you need to keep them?

118AE. You are required to keep records of all transactions that relate to the rebate claim for the longest of:

·
 five years after the completion of the transactions or acts to which they relate
·
 the period of review for any assessment to which those records, transactions or acts relate. In practical terms this means four years from the day after the day the Commissioner first gives notice of an assessment to the New Zealand participant (unless the period of review is extended in the circumstances set out in section 155-35 of Schedule 1 to the TAA), and
·
 where an assessment has been amended under Subdivision 155B of Schedule 1 to the TAA, the refreshed period of review that applies to the last of the amendments.

118AF. The records must be in English or readily accessible and convertible into English.

85. Appendix C

Omit Appendix C; substitute:

Appendix 3

____________________________________________________________________________________________

Example 28 - calculation of approved selling price in Australian currency where the components that make up the approved selling price are expressed in New Zealand currency.

118AG. Kiwi Wines is a wine producer that manufactures wine in New Zealand. Several shipments of wine are sold to an Australian importer during the 2017-18 financial year. The importer pays wine tax on the wine at importation. The invoice prices, expressed in New Zealand dollars, include expenses for freight and insurance to transport the wine to the New Zealand shipping dock. The importer meets the shipping costs from the New Zealand shipping dock to Australia.

118AH. Kiwi Wines invoices the Australian importer for the wine:

Invoice date Invoice amount (NZ$) including transport costs Transport costs to shipping dock Invoice amount (NZ$) excluding transport costs Date payment received
21 July 2017 $26,500 $500 $26,000 21 Aug 2017
13 Sept 2017 $69,000 $1,000 $68,000 21 Oct 2017
4 Dec 2017 $126,000 $2,000 $124,000 21 Jan 2017
5 April 2018 $22,500 $500 $22,000 21 May 2017

Note: Expenses of freight and insurance incurred by the New Zealand participant are excluded from the invoice price as these expenses are unrelated to the production of the wine in New Zealand.

Options available to convert the invoice amounts to Australian dollars

118AI. The invoice date for each sale must be used as the conversion day as the invoice date occurs before the date payment was received.

Method 1 - the RBA rate

118AJ. Assume the following RBA exchange rate for a unit of New Zealand currency per Australian dollar:

21 July 2017 1.0650

13 Sept 2017 1.0741

4 Dec 2017 1.0823

5 April 2018 1.0331

Conversion to Australian currency:

Invoice date Invoice amount (NZ$) excluding transport costs Conversion rate Invoice amount (A$)
21 July 2017 $26,000 1.0650 $24,413
13 Sept 2017 $68,000 1.0741 $63,309
4 Dec 2017 $124,000 1.0823 $114,571
5 April 2018 $22,000 1.0331 $21,295
Total of invoices A$223,588

Method 2 - the agreed rate

118AK. Assume that all sales were made under the same agreement, and that for the period of the agreement in which the sales were made, the agreed exchange rate for a unit of New Zealand currency per Australian dollar was 1.0755.

Conversion to Australian currency:

Invoice date Invoice amount (NZ$) excluding transport costs Conversion rate Invoice amount (A$)
21 July 2017 $26,000    
13 Sept 2017 $68,000    
4 Dec 2017 $124,000    
5 April 2018 $22,000    
  Total $240,000 1.0755 A$223,152

Note: Where the New Zealand participant and the recipient of the wine are associates, the agreed rate should reflect a rate agreed to by parties dealing at arm's length. Where the agreed rate does not apply, you need to select the RBA rate or the average yearly RBNZ rate, if applicable.

Method 3 - average yearly RBNZ rate

118AL. Assume the average yearly RBNZ rate for a unit of Australian currency per New Zealand dollar is calculated to be 0.9390 for the 2017-18 financial year.

Invoice date Invoice amount (NZ$) excluding transport costs Conversion rate Invoice amount (A$)
21 July 2017 $26,000    
13 Sept 2017 $68,000    
4 Dec 2017 $124,000    
5 April 2018 $22,000    
  Total $240,000 0.9390 A$225,360

In this example Kiwi Wines may wish to use the average yearly RBNZ rate to maximise its rebate claim.

86. Appendix D

(a) Omit heading 'Appendix D'; substitute 'Appendix 4'.

(b) After the heading, insert paragraph 118AK:

118AK. Set out below is an example of a wholesaler's statement.

87. Appendix E

Omit the Appendix.

88. Appendix F

(a) Omit the Appendix.

(b) Insert new paragraph 119:

119. Below is a detailed contents list for this Wine Equalisation Tax Ruling:

  Paragraph
Summary - what this ruling is about 1
Background 6
How does the WET work? 6
Producer rebates 11
Frequently used terms 14B
Ruling 16
Who is eligible for the producer rebate? 16
Approval as a New Zealand participant 17
Rebatable wine 19A
Producer of rebatable wine 19C
Manufacture of wine 21
Example 1 - manufacture from grapes 29
Example 2 - purchasing and bottling 31
Blending as manufacture 32A
Example 3 - manufacture by blending own wine with purchased wine 32C
Example 4 - blending wine with grape juice concentrate 32E
'Producer' of wine - contract manufacture 35A
Source product 35C
Wine produced in New Zealand 36
Example 5 - Wine that is not produced in New Zealand 38
Wine has been, or is likely to be, exported to Australia 39
Meaning of export 40
Meaning of Australia 45
'Likely to be' 48
Entitlement to claim the rebate 61
Wine exported to Australia 62
WET paid for an assessable dealing with the wine 64
Source product - 85% ownership rule 71A
Example 6 - ownership of source product at all times 71I
Example 7 - retention of title clause 71N
Source product - deeming provisions 71R
Example 8 - grape juice concentrate more than 10% of total volume of wine 71U
Example 9 - purchased grape pulp not source product 71X
Example 10 - any other substances - not similar 71AI
Example 11 - any other substances - similar 71AK
Example 12 - 85% source product ownership rule satisfied 71AO
Example 13 - 85% source product ownership rule not satisfied 71AS
Example 14 - beverage that falls under the grape wine product definition - 85% ownership of source product rule not satisfied 71AV
Example 15 - grape wine product - 85% ownership not satisfied 71AZ
Transitional rules 71BC
2018 vintage wine 71BC
2017 and earlier wine - 85% source product ownership rule 71BE
2017 and earlier wine 71BG
Example 16 - 85% source product ownership rule deemed to be satisfied for 2017 vintage wine 71BK
2017 year and earlier fortified wine 71BP
Example 17 - fortified wine made exclusively from blending wines stored as at 1 January 2018 71BW
Example 18 - blend of stored wine, wine produced by the producer after 1 January 2018 and purchased wine 71BX
Example 19 - fortified wine in a solera system 71BZ
Container for retail sale 71CD
Example 20 - container for retail sale rule satisfied 71CG
Example 21 - size and not suitable for retail sale 71CJ
Bulk wine exported to Australia where it is bottled, labelled and sold 71CL
Example 22 - bulk wine packaged in Australia 71CO
Branded with a trade mark 71CS
What is a trade mark? 71CU
'Identifies' or 'readily associated with' you 71CW
Example 23 - trade mark that identifies the producer 71DA
Ownership of the trade mark 71DD
Registered trade mark 71DG
Example 24 - registered trade mark 71DH
Application pending 71DJ
In use since 1 July 2015 71DK
Calculation of the producer rebate 72
Associated producers 73
Amount of producer rebate 82
Example 25 - approved selling price 83
Approved selling price of the wine 84
Example 26 - costs excluded from approved selling price 86
Trade incentives 87
Foreign exchange conversion 93
Option 1 - conversion for components expressed in any foreign currency 95
Option 2 - additional option for components expressed in New Zealand currency 98
Consistent use of exchange rate 100
Accompanied by supporting evidence 103
Date of effect 118A
Appendix 1 118B
Rebatable wine 118B
Appendix 2 - Compliance guide 118C
Approval or refusal of application - New Zealand participant 118C
Example 27 - approval backdated 118E
Revocation of approval as New Zealand participant 118J
How do I claim the producer rebate? 118M
Approved form 118M
Timing 118N
What happens if the producer rebate is claimed when it should not have been claimed or when it is over-claimed 118S
Not entitled to the producer rebate 118S
Excess claim - single producer 118U
Excess claim - associated producer 118X
Impact of volume rebates and discounts 118AA
A$200 exclusion 118AD
What records do you need to keep and how long do you need to keep them? 118AE
Appendix 3 118AG
Example 28 - calculation of approved selling price in Australian currency where the components that make up the approved selling price are expressed in New Zealand currency 118AG
Options available to convert the invoice amounts to Australian dollars 118AI
Method 1 - the RBA rate 118AJ
Method 2 - the agreed rate 118AK
Method 3 - average yearly RBNZ rate 118AL
Appendix 4 118AM
Detailed contents list 119

This Addendum applies before and after date of issue.

Commissioner of Taxation

29 June 2018

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

References

ATO references:
NO  1-CHKFNUU

ISSN: 2205-6173

 


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