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Excise guidelines for the alcohol industry

10 BEER

10.1 PURPOSE

10.2 INTRODUCTION

10.2.1 WHAT IS BEER?

10.2.2 WHAT CATEGORIES OF BEER ARE THERE?

10.3 POLICY AND PRACTICE

10.3.1 EXCISE LIABILITY FOR BEER

10.3.2 WHAT ARE MY RESPONSIBILITIES AS A BREWER?

10.3.3 WHAT RECORDS DO I HAVE TO KEEP?

10.3.4 BREW ON PREMISES SHOPS

10.3.5 WHAT ELSE CAN WE DO?

10.4 PROCEDURES

10.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO BEER?

10.6 TERMS USED

10.7 LEGISLATION (quick reference guide)

APPENDIX A

10.1 PURPOSE

This chapter deals with how excise law applies to beer and discusses:

  • what beer is
  • what categories of beer there are, including beer brewed at home and beer repackaging
  • calibration of vessels and instruments
  • sampling and strength testing
  • contents for excise duty purposes
  • excise liability for beer
  • brewers' responsibilities, including record keeping and production losses
  • refunds and remissions, including microbrewery refunds and duty paid beer returned to the brewery, and
  • Brew On Premises Shops.

10.2 INTRODUCTION

10.2.1 WHAT IS BEER?

Beer is defined in the Schedule to the Excise Tariff Act. In summary, a beverage is 'beer' if it is brewed and:

  • is the product of the yeast fermentation of an aqueous extract of predominantly malted or unmalted cereals, but may also contain other sources of carbohydrates
  • contains hops, or extracts of hops, so that the beverage has no less than four International Bitterness Units (IBU's) or other bitters. If it contains other bitters, the beverage must have a bitterness comparable to that of a beverage with no less than four International Bitterness Units
  • may have spirit distilled from beer added to it if that spirit adds no more than 0.5% to the final total volume of alcohol
  • may have other substances, including flavours, containing alcohol (other than beer spirit) added to it but only if that alcohol adds no more than 0.5% to the final total volume of alcohol
  • contains no more than 4% by weight of monosaccharide and disaccharide (sugars)
  • does not contain any artificial sweeteners, and
  • has an alcohol content of more than 1.15% by volume.

IBU's are a recognised measure of bitterness of beer containing hops or extracts of hops.

More information about IBU's is publicly available on the internet.

You should be able to establish whether your product meets the definition of 'beer' for excise purposes from your manufacturing specifications and processes and from standard industry information.

Products that clearly meet the definition will not require testing. However, if you are unsure whether your product meets the definition, you should have one brew tested and as long as you continue to brew that formula, you will not need to undertake any further testing unless directed by the ATO. You will need to do this for each type of beer you make where you are unsure if it will meet the definition.

What records should you keep?

You should keep beer recipe sheets and evidence you have brewed to those recipes. The ATO uses these records to establish:

  • the quantities of raw materials you used to manufacture each type of beer
  • whether or not your beverage meets the definition of beer for excise purposes.

Your beer recipe sheets should include details of the beer type, and the type and quantity of all the following:

  • malt
  • mash ingredients
  • hops
  • other kettle additions
  • any other additions

*Note - if your beverage contains more that 1.15% alcohol by volume but does not fit within the definition of beer, it will be an other excisable beverage.

For more information about the definition of beer or how excise duty applies to it, you can phone the ATO on 1300 137 290

10.2.2 WHAT CATEGORIES OF BEER ARE THERE?

There are three categories of beer. These are:

  1. Home brew that is brewed for non-commercial purposes using non-commercial facilities and equipment.
  2. Beer that is brewed for non-commercial purposes using commercial facilities or equipment such as, brew on premises shops (BOPS).
  3. Any other beer that meets the definition, for example beer brewed for commercial purposes, including repackaging.

Home brewing

Beer produced for non-commercial purposes using non-commercial equipment ('home brew') is not classified to an item in the Schedule to the Excise Tariff Act and is therefore not excisable.[217]


You must not sell or offer for sale home brewed beer which has been produced under the home brew exemption (for non-commercial purposes).[218]

Beer brewed in a Brew On Premises Shop

BOPS provide commercial facilities and/or equipment to customers to make beer for their own consumption.

Beer produced in a BOPS must be brewed by the customer for personal use by the customer, and not for sale.

Beer produced in a BOPS is excisable.


For more information about BOPS refer to Section 10.3.4 - Brew On Premises Shops.

Beer brewed for commercial purposes

Beer is for commercial purposes if it is not home brew or beer brewed in a BOPS.

10.3 POLICY AND PRACTICE

10.3.1 EXCISE LIABILITY FOR BEER

How is beer classified ?

The classification of beer depends on three things:

  1. the volume of the container in which the beer is packaged
  2. the alcoholic strength of the beer, and
  3. whether it is for commercial or non-commercial purposes.

Commercial beer packaged in containers not exceeding 48 litres capacity

Beer packaged in a container not exceeding 48 litres capacity attracts a higher rate of excise duty. This applies to bottled and canned beer, but also to kegs not exceeding 48 litres capacity.

There are three subitems in the Schedule to the Excise Tariff Act for beer in containers not exceeding 48 litres capacity.

The following is an extract of the Schedule to the Excise Tariff Act relevant to beer in containers not exceeding 48 litres capacity.

Tariff Item

Subitem

Description of Goods



Rate



1

Beer

1.1

Beer not exceeding 3% by volume of alcohol packaged in an individual container not exceeding 48 litres

$38.70* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

1.5

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in an individual container not exceeding 48 litres

$45.08* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

1.10

Beer exceeding 3.5% by volume of alcohol packaged in an individual container not exceeding 48 litres

$45.08 per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 1 February 2013. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au

Commercial beer packaged in containers more than 48 litres capacity

Beer packaged in a container that exceeds 48 litres capacity attracts a lower rate of excise duty. This applies to:

  • kegs greater than 48 litres of beer, and
  • beer that is delivered for sale over the bar directly from a storage tank.

There are three subitems for beer in containers greater than 48 litres capacity.

The following is an extract of the Schedule to the Excise Tariff Act relevant to beer in containers of more than 48 litres capacity.

Tariff Item

Subitem

Description of Goods



Rate



1

Beer

1.2

Beer not exceeding 3% by volume of alcohol packaged in an individual container exceeding 48 litres

$7.73* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

1.6

Beer exceeding 3% but not exceeding 3.5% by volume of alcohol packaged in an individual container exceeding 48 litres

$24.25* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.11

Beer exceeding 3.5% by volume of alcohol packaged in an individual container exceeding 48 litres

$31.74* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 1 February 2013. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au


When excise duty is paid on beer at the rate specified in subitems 1.2, 1.6 or 1.11 in the Schedule to the Excise Tariff Act, and is then subsequently repackaged into containers not exceeding 48 litres, the repackaging is taken to be excise manufacture.[219]

The repackaged beer is dutiable at the rate that applies to beer packaged in a container not exceeding 48 litres capacity.

This is in addition to any excise duty already paid at the rate for beer in a container exceeding 48 litres capacity.

Non-commercial Beer (i.e. beer produced at a BOPS)

Separate classifications apply to beer produced at a BOPS, according to strength.

The following is an extract of the Schedule to the Excise Tariff Act relevant to beer produced at a BOPS.

Tariff Item

Subitem

Description of Goods



Rate



1

Beer

1.15

Beer not exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$2.72* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

 

1.16

Beer exceeding 3% by volume of alcohol produced for non-commercial purposes using commercial facilities or equipment

$3.14* per litre of alcohol calculated on that alcohol content by which the percentage by volume of alcohol of the goods exceeds 1.15

*Rate of duty as at 1 February 2013. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au.

Strength of the beer

As can be seen from the extracts of the Schedule to the Excise Tariff Act above the subitem applicable to the beer is dependant on the strength of the beer.

There are rules that you must follow for measuring the alcohol content of excisable beer. The rules for breweries that produce less than 100,000 litres per annum are different from the rules for breweries that produce 100,000 litres or more per annum

Breweries that produce more than 100,000 litres per annum

If you produce 100,000 litres or more per annum you must ensure:

  • your measuring instruments and equipment are regularly tested and certified, and
  • the methods you use follow the rules.


For details about the rules for measuring alcoholic content, refer to Excise (Alcoholic strength of excisable goods) Determination 2009 (No. 1).

Samples, to test strength, should only be drawn after beer has reached its final alcoholic strength. This will be after pasteurisation or in the case of naturally conditioned beer, after secondary fermentation.

If you are unable to establish your own consistently accurate testing methods, each brew you make must be analysed by a National Association of Testing Authorities (NATA) accredited laboratory at your expense. Such testing should continue until you can establish consistency between your own strength testing results and those of the NATA accredited laboratory.

Breweries that produce less than 100,000 litres per annum

If you produce less than 100,000 litres per annum you must ensure:

  • your measuring instruments and equipment are regularly tested and certified, and
  • the methods you use follow the rules.


For details about the rules for measuring alcoholic content, refer to Excise (Alcoholic strength of excisable goods) Determination 2009 (No. 1).

Samples, to test strength, should only be drawn after beer has reached its final alcoholic strength. This will be after pasteurisation or in the case of naturally conditioned beer, after secondary fermentation.

If you are unable to establish your own consistently accurate testing methods, each brew you make must be analysed by a National Association of Testing Authorities (NATA) accredited laboratory at your expense. Such testing should continue until you can establish consistency between your own strength testing results and those of the NATA accredited laboratory.

To calculate the alcoholic strength of the beer you may use a hydrometer and formula. The formula you use must be supported by a documented testing process and the records kept for auditing purposes.

What are the permitted variations in beer strength?

The actual strength of beer may vary slightly from batch to batch. Therefore, the classification of the beer and the litres of alcohol delivered into the Australian domestic market will vary, depending on the strength of the batch.

For the purposes of working out the classification and excise duty payable on beer:

  • If the actual strength of beer, other than beer subject to secondary fermentation,[220] does not exceed the labelled strength by more than 0.2%, the strength is the labelled strength and the classification applicable to that strength applies.
  • If the actual strength of beer, other than beer subject to secondary fermentation, exceeds the labelled strength by more than 0.2%, the strength is the actual strength and the classification applicable to that strength applies.
  • If the actual strength of beer subject to secondary fermentation does not exceed the labelled strength by more than 0.3%, the strength is the labelled strength and the classification applicable to that strength applies.
  • If the actual strength of beer subject to secondary fermentation exceeds the labelled strength by more than 0.3%, the strength is the actual strength and the classification applicable to that strength applies.

Example 10A

For beer not subject to secondary fermentation

BRAND NAME

CONTAINER SIZE

LABELLED STRENGTH

ACTUAL STRENGTH

A

50 litre keg

5.7%

5.6%

B

750ml bottles

3.3%

3.6%

C

30 litre keg

3.5%

3.7%

BRAND A:

Labelled strength does not exceed actual strength by more than 0.2% tolerance. Therefore, the subitem is 1.11 in the Schedule to the Excise Tariff Act and the strength to be used for duty calculations is 5.7%.

BRAND B:

Actual strength exceeds labelled strength by more than 0.2% tolerance. Therefore the subitem is 1.10 in the Schedule to the Excise Tariff Act and strength to be used for duty calculations is 3.6%.

BRAND C:

Actual strength does not exceed labelled strength by more than 0.2% tolerance. Therefore the subitem is 1.5 in the Schedule to the Excise Tariff Act and strength to be used for duty calculations is 3.5%.

How do I measure the volume?

The requirements for measuring the volume of containers of excisable alcoholic beverages are detailed in Excise Act (Volume - excisable goods) Determination 2009 (No. 1).

To ensure that the volume of beer in a container is within the tolerance allowed for that container, sufficient samples of packaged beer, including beer in kegs, must be measured to ensure that the actual volume in each container is within permitted variations. Permitted variations in the volume of the contents of a container are different for bulk containers and other containers such as bottles or cans.

Beer in a bulk container:

For beer manufactured and packaged in kegs, you are required to nominate the volume you intend to fill each keg size. This information is to be provided:

  • in the initial application for a licence, or
  • at any time after a licence is issued, if it is intended to change the fill volumes or introduce other bulk container sizes.

For beer packaged in bulk containers, the tolerance allowed on volume is 1% of the nominated volume. If the actual volume:

  • does not exceed the nominated/labelled volume by more than 1%, the dutiable volume is the nominated/labelled volume (this includes where the actual volume is less than the nominated volume)
  • exceeds the nominated/labelled volume by more than 1%, - the dutiable volume is the nominated/labelled volume, plus the volume by which the actual volume exceeds the nominated/labelled volume by more than 1%, and
  • is not nominated, the dutiable volume is the actual volume.

Beer in other containers

For beer packaged in other containers the tolerance allowed on volume is 1.5% of the labelled volume. If the volume of the contents is:

  • indicated on a label printed on or attached to the container, and:
    • the actual volume does not exceed the labelled contents by more than 1.5%, the dutiable volume is the labelled volume (this includes where the actual volume is less than the labelled volume)
    • the actual volume exceeds the labelled volume by more than 1.5%, the dutiable volume is the labelled volume plus the volume by which the actual volume exceeds the labelled volume by more than 1.5%, or
  • not indicated on a label - the dutiable volume is the actual volume.

Establishing the volume of containers

We realise variations can occur during packaging/racking of product.

Where the actual volume is within the tolerances allowed:

For bulk containers: Dutiable volume = Nominated fill.

For other containers: Dutiable volume = Labelled volume.

Where the actual volume is not within the tolerances allowed:

For bulk containers: the additional dutiable quantity (ADQ) equals the actual volume (AV) less the nominated fill (NF) multiplied by 101 per cent, or:

ADQ = AV - (NF x 101%)

For other containers: the additional dutiable quantity (ADQ) equals the actual volume (AV) less the labelled volume (LV) multiplied by 101.5 per cent, or:

ADQ = AV - (LV x 101.5%)

Example 10B - packaged beer @ 3.3% a/v

750 ml bottle (stated volume on label)

765 ml fill (actual volume)

15 ml overfill (difference between stated and actual volume)

750ml

(labelled volume)

     X

(multiply)

101.5%

(1.5% tolerance)

  =  

761.25ml

(total fill within tolerance)

765ml

(actual volume)

     -

(minus)

761.25ml

(total fill within tolerance)

  =  

3.75ml

(quantity above tolerance)

The bottles are therefore taken to contain 753.75ml of beer and classified to subitem 1.5 in the Schedule to the Excise Tariff Act.

Assuming an actual bottling run of 1,000 bottles, the volume of excisable product would be:

1,000 x 753.75ml = 753.75 litres

Example 10C - bulk beer @ 5% a/v

49 litres fill (actual volume)

47 litres nominated (nominated fill)

2 litres overfill (difference between actual volume and nominated fill)

47 litres

(nominated fill)

X

(multiply)

101%

(1% tolerance)

  =  

47.47 litres

(total fill within tolerance)

49 litres

(actual volume)

-

(minus)

47.47 litres

(total fill within tolerance)

  =  

1.53 litres

(quantity above tolerance)

The kegs are therefore taken to contain 48.53litres of beer and classified to subitem 1.11 in the Schedule to the Excise Tariff Act.

Assuming an actual racking run of 200 kegs, the volume of excisable product would be:

200 x 48.53 litres = 9,706 litres

The beer must be sampled and measured to determine whether the actual volume of the contents exceeds the nominated fill, or labelled volume by more than the permitted tolerance. This must be done for each batch.

Beer delivered direct to consumers from a storage tank

In some instances beer is manufactured at a brew pub and the beer is pumped from a storage tank (greater than 48 litres) in the underbond area to the bar where it is sold as draught beer. In these instances the classification for this beer is for beer in containers exceeding 48 litres.

How do I calculate how much duty is payable?

All eight subitems in the Schedule to the Excise Tariff Act relating to beer specify that duty is calculated on that alcohol content by which the percentage by volume of alcohol of the beer exceeds 1.15. This means to calculate the dutiable quantity the strength is reduced by 1.15 and then multiplied by the quantity.

Example 10D

The dutiable quantity of alcohol in 100 litres of beer at 5% alcohol by volume is:

100 x (5% - 1.15%) = 3.85 Lals

For the purpose of calculating duty payable, Lals is truncated to one decimal place.

The lals are then multiplied by the relevant duty rate to determine the duty payable:

3.8 x $30.11[221] = $114.41

What are accepted methods for measurement?

Accepted methods you can use to measure volume include:

  • calibrated dip stick, tape or sight glass
  • weighing and using density tables
  • calibrated flow meter, or
  • any other method that consistently produces a similar result.

If you use calibrated tanks, you may need to have them recalibrated if:

  • they are damaged (for example they suffer bumps, dents and bulges) and the damage creates doubt about the continuing accuracy of previous calibrations, or
  • they are moved, modified or extensively repaired, or
  • doubt exists about the accuracy of the calibrations.


Further details are contained in Excise Act (Volume - Alcoholic excisable goods) Determination 2009 (No. 1).

Can duty-paid beer be returned to the brewery?

Beer may be returned to underbond stock, if it is due to:

  • incorrect stock selections, or
  • over delivery.[222]

Returns must be:

  • accompanied by the original documentation, and
  • returned within 48 hours of delivery, or such further time as we may allow, if we are satisfied that the goods have been returned without delay.

Beer cannot be returned to underbond stock if:

  • breakages occur after the goods have left excise control
  • beer that is no longer under excise control was delivered due to misunderstood ordering[223], or
  • it is unsold duty paid beer.[224]


Where duty paid beer is returned to you and it doesn't meet any of the above conditions for return to underbond stock, no refund of excise duty can be made.

10.3.2 WHAT ARE MY RESPONSIBILITIES AS A BREWER?

If you are licensed to manufacture beer you are responsible for the safe custody of all alcohol under your control.[225]

You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable beer. [226]

Where, after we take stock of excisable beer manufactured and the materials you use in the manufacturing process it appears to us, that not all the duty that should have been paid has been paid we can call upon you to account for the shortfall. If you cannot account for this shortfall we can demand that you pay the amount that should have been paid.[227]

If you hold a manufacturer licence, you do not need a separate storage licence to store excisable beer that you manufactured at those premises. However, if you also store excisable beer that has been manufactured by another licensed manufacturer you will need a storage licence.

You are also responsible for ensuring that you comply with all conditions of your licence.[228]


For information about storage licences and conditions of licences refer to Chapter 2 - Licensing: Applications.

You must also:

  • ensure beer is only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[229]
  • pay the correct amount of excise duty [230]
  • get permission to move underbond excisable beer[231]
  • ensure that your manufacture complies with the Excise Act and any conditions specified in your licence[232]
  • not manufacture beer at premises that are not specified in your licence[233]
  • keep, retain and produce records in accordance with a direction under section 50 of the Excise Act
  • give us access to your factory when requested[234]
  • keep your excisable beer safe and accounted for to our satisfaction[235]
  • provide all reasonable facilities to enable us to exercise our powers under the Excise Act[236]
  • provide sufficient lighting, correct weights and scales, and all labour necessary for
    • weighing material received into your factory
    • weighing all excisable beer manufactured in your factory, and
    • taking stock of all material and excisable beer contained in your factory.[237]


For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty.


For more information about obtaining permission to move underbond alcohol products refer to Chapter 5 - Movement permissions.

Production Losses

What are production losses?

Production losses include:

  • any losses that occur after fermentation has taken place (that is when alcohol has been produced and beer becomes accountable), or
  • when a brew is to be destroyed by tipping to waste.

You must be able to account for any losses.[238]

Accurate records of any loss of product must be kept for the period directed.[239] The records should be sufficient to enable comparison between current and historical losses for the same procedures.

We accept that some losses occur during production at various stages including:

  • transfer of product from the fermenter (due to spent yeast being drawn off)
  • filtration
  • transfer between storage tanks
  • reprocessing, and
  • bottling.

How do I calculate bottling losses?

Bottling losses are calculated as follows:

Header tank opening dip

Less

  • header tank closing dip
  • volume of packaged product
  • volume of filter losses
  • volume of breakages and leakages
  • volume of samples drawn, and
  • volume of drainings and flushings

Equals bottling loss.

Excise duty on minor losses that occur as a normal part of the production or packaging process do not need to be acquitted by means of a remission. However, these losses must be recorded and accounted for in your records.


You must apply for a remission for other losses, such as a bad batch or accidental loss within the storage area.

beer

Where beer is unfit for human consumption and is sold for manufacturing purposes, for example for use in vinegar manufacture, it may, with our approval, be removed from your brewery: [240]

  • in containers marked 'spoilt beer'
  • without entry for home consumption, and
  • without the payment of excise duty.

Spoilt beer must be unfit for human consumption and not just out of specification. For example, beer that is merely under-filled or under-strength is not unfit for human consumption.

10.3.3 WHAT RECORDS DO I HAVE TO KEEP?

It is good business practice to keep suitable and adequate records for your operations. Many of the records you will need to be able to account for your beer production are the same as the records that you would normally keep for your own business purposes.

You must keep records, as directed by us and retain those records for the period directed. Your records must be available for us to inspect when requested. [241]

The information you may be requested to record includes:

  • the amount of excisable beer produced showing all inputs, outputs and waste
  • details of all excisable beer held in your licensed premises
  • all deliveries from your licensed premises
  • details of all duty payments and excise returns, and
  • any refunds and remissions.

Examples of records you may be directed to keep, include:

Raw materials register

A raw materials register is a record of all of the raw materials received into the brewery. It includes the movement of raw materials out of storage and into production.

These records should include:

  • an invoice number
  • the date, type and quantity of the raw material received
  • the opening stock quantity
  • the date, type, quantity and batch number for the raw material sent to production, and
  • the closing stock quantity.

Recipes used

You should maintain beer recipe sheets. We use these as a reference to establish the quantities of raw materials used to manufacture each particular beer. Recipes are also used to verify whether or not a product is 'beer' as defined in the Schedule to the Excise Tariff Act or whether it would be classified as an 'other excisable beverage'.

The minimum details you should include on the recipe sheet are:

  • beer type
  • malt details (type and quantity)
  • mash ingredients (type and quantity)
  • hops details or other bitters details (type and quantity), and
  • other kettle additions (type and quantity).

Brew house records

The minimum details you should keep for brew house records include:

  • the type of beer being manufactured
  • details of lauter tun, mash tun, kettle, and whirlpool
  • batch number and the date on which batch manufacture started
  • quantities of materials used (such as malt and hops)
  • volume of water added to the kettle
  • volume of liquid (wort) transferred to fermentation tanks
  • details of fermentation tanks used, and
  • details of losses incurred during transfer of product.

Fermentation and storage

The minimum details you should keep on fermentation and storage include:

  • date on which liquid (wort) was transferred to fermentation tanks
  • volume of liquid (wort) transferred to fermentation tanks
  • quantity of yeast added to the liquid (wort)
  • details of specific gravity measurements during fermentation
  • dates of specific gravity measurements during fermentation
  • temperature at which specific gravity measurements were made, and
  • fermentation tank details.

Bright beer register

Once fermentation is complete quantities of product transferred into 'bright beer' tanks must be recorded.


Bright beer is an industry term for beer which has been matured, carbonated and filtered and is ready for packaging and drinking.

The minimum details you should keep in the bright beer register include:

  • the date product was transferred into storage tanks
  • the quantity of product transferred into storage tanks
  • whether the product was filtered during transfer
  • the date product was moved out of storage tanks for packaging
  • the quantity and temperature of product moved out of storage tanks for packaging
  • the type of product in the tanks, and
  • details of identifying marks/numbers of tanks used.

Packaged product register

Details of all packaged product should be recorded including the:

  • product type
  • package details (for example type and size of container)
  • opening stock details and date
  • quantities of packaged product as a running total
  • strength of packaged product
  • date on which product moved into store
  • quantities moved into the packaged product store
  • date on which product moved out of store, and
  • quantities moved out of the packaged product store.

Any movement of packaged product should be able to be matched with:

  • invoices
  • external delivery documents, and
  • records of any quantities used on brewery premises.

Other records

You should also maintain records on:

  • details of operational gains and losses
  • details of packaging losses
  • sales invoices and delivery documents
  • details of stocktakes undertaken
  • copies of excise returns
  • under bond movement documents
  • refund and remission approvals, and
  • destruction of goods

10.3.4 BREW ON PREMISES SHOPS

Subitems 1.15 and 1.16 in the Schedule to the Excise Tariff Act relate to beer produced for non-commercial purposes using commercial facilities or equipment. This means the beer is made by the consumer and is not for sale.

Businesses offering commercial facilities or equipment to make beer for non-commercial purposes are commonly referred to as Brew on Premises Shops (BOPS).

Typically, BOPS have a number of brewing kettles, chilling facilities and bottling equipment as permanent fixtures. They also provide beer-making ingredients such as yeast, malt and hops, usually in kit form. BOPS staff are on hand to advise customers in all aspects of beer making.

The customer pays up front for:

  • the ingredients
  • use of the equipment
  • bottles (if needed), and
  • the expertise of the BOPS staff.

The customer is responsible for their own brew. Once the beer is bottled by the customer, about a fortnight after the initial process, the customer takes the beer home for consumption.

How is excise duty calculated on beer from a BOPS?

Excise duty on beer brewed at a BOPS is calculated on each batch (customer's fermenter).

When the strength of each recipe has been established, that strength should be recorded and then used as a standard for that recipe for duty payment purposes.

The ATO generally accepts strength testing for sample or test brews on the following basis.

Excise liability for BOPS is calculated per batch (customer's fermenter). A batch is usually 48-50 litres in volume and the strength of the batch is taken to be a "standard" strength which applies to a particular recipe/beer type, having been verified by previous test brews.

These initial test brews must show consistency in strength test results for each recipe/beer type. For example, when testing beer with target strength of 4.9%, to show consistency, two test brews could be sampled that produce identical results (4.9%). Alternatively, three test brews could be sampled that produce consistent results within .2% tolerance (e.g. 4.7%, 5.0% and 5.1%). Upon examination of the strength testing results, field officers are to make a judgement on whether they consider that consistency in results has been demonstrated.

Once consistency can be shown then this standard strength can be applied to all batches of that particular recipe/beer type.

Over a period of time, due to possible variations in raw materials, there may be a need to conduct further test brews for each recipe/beer type to ensure that the standard strength has been maintained and can therefore continue to be applied to each batch. Additional strength testing must be undertaken for all changes to brew formulations.

You pay the excise duty to us on a weekly basis (once you have a periodic settlement permission) by completing an Excise return (NAT 4285).


To calculate the alcoholic strength of the beer you may use a hydrometer and formula, unless you produce more than 100,000 litres in a financial year.

If you are a BOPS operator, you are required to maintain sequential batch cards that contain the recipe and strength details for each brew, including test brews.

Excise is payable on the full contents of each fermenter. Bottling is carried out by your individual customers and no allowance is permitted for bottling or packaging losses.

Beer produced in your BOPS that is greater than 3% by volume is classified to subitem 1.16 in the Schedule to the Excise Tariff Act. Beer that is less than or equal to 3% by volume is classified to subitem 1.15 in the Schedule to the Excise Tariff Act.


The current rates of excise duty for beer are detailed in the Schedule to the Excise Tariff Act.


For more information about how to calculate duty payable refer to Section 10.3.1 - Excise liability for beer.

Is excise duty charged on sample and test brews?

If you are a BOPS operator, you may produce sample brews for tasting by customers, whether consumed on the premises or not.

You may also undertake test brews designed to confirm the integrity of your equipment and the results from your recipes.

Sample brews and test brews are not classified under subitems 1.15 and 1.16 in the Schedule to the Excise Tariff Act; they are classified under subitems 1.1 to 1.11 in the Schedule to the Excise Tariff Act depending on their strength and the size of the fermenter.

If the test brew has not been delivered into the Australian domestic market and duty has not been paid the licence holder may apply for a remission of excise duty and approval to dispose of the test brew.


For more information about refunds refer to Chapter 7 - Remissions, refunds, drawbacks and exemptions.

What records do I need to keep?

You must keep records as directed by us and retain those records for the period directed. Your records must be available for us to inspect when requested. [242]

The information you may be directed to record includes:

  • Batch card sequencing (including the recipe, volume and strength details for each brew made)
  • Records of all stock received (pre-packaged recipes, yeast, hops, malt)
  • Details of test brews (remission approval or excise return if test brew not destroyed)
  • Details of sample brews
  • Copies of excise returns.

Examples of acceptable data for these records are included at Appendix A at the end of this Chapter.

10.3.5 WHAT ELSE CAN WE DO?

Access

We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises. [243] Note: we will usually only seek to enter your premises during normal business hours.

Stop vehicles

We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable alcohol products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle is unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[244]

Search vehicles

We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable alcohol products and that the vehicle has been used, is being used or will be used in the commission of an offence against the Excise Act (and certain offences in the Crimes Act 1914[245] and Criminal Code[246] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[247]

Examine goods

We can open packages and examine, weigh, mark and seal any excisable goods that are subject to excise control and lock up, seal, mark or fasten any plant in or on your factory.[248]

We can also:

  • supervise the manufacture of excisable alcohol products[249]
  • take samples of materials, partly manufactured excisable alcohol products and excisable alcohol products subject to excise control, and alcohol products that we have reasonable grounds for suspecting are excisable alcohol products on which duty has not been paid.[250]

10.4 PROCEDURES

10.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on beer contact us as follows:

phone 1300 137 290
fax 1300 130 916,
email us at ATO-EXC-Alcohol@ato.gov.au, or
write to us at
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO BEER?

The following are the penalties that may apply after conviction for an offence.

Manufacture

If you manufacture excisable alcohol products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[251]

If you manufacture excisable alcohol products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[252]

If you manufacture excisable alcohol products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[253]

Move, alter or interfere

If you move underbond excisable alcohol products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[254]

Note:

This includes moving underbond excisable alcohol products from your premises to any other location or for export.

If your movement of underbond excisable alcohol products does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[255]

If you move, alter or interfere with excisable alcohol products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[256]

If your brewery licence has been cancelled, or has expired and has not been renewed, and you remove from the premises any beer on which duty has not been paid, the penalty is a maximum of 50 penalty units.[257]

Deliver

If you deliver excisable alcohol products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[258]

Sell

If you sell excisable alcohol products on which duty has not been paid (unless it is an underbond sale), the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable alcohol products.[259]

Records

If you do not keep, retain and produce records in accordance with a direction under section50 of the Excise Act, the penalty is a maximum of 30 penalty units.

Directions

If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[260]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[261]

Evade

If you evade the payment of any duty that is payable, the maximum penalty is 5 times the amount of duty evaded or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[262]

Facilities etc.

If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[263]

If you do not provide sufficient lighting, correct weights and scales, and all labour necessary for weighing material received into and all excisable alcohol products manufactured in your factory, and for taking stock of all material and excisable alcohol products contained in your factory, the maximum penalty is 10 penalty units.[264]

If we mark or seal excisable alcohol products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[265]

10.6 TERMS USED

Bulk container

A container that has the capacity to have packaged in it more than two litres of liquid.[266]

Container

Any article capable of holding liquids.[267]

Deliver into the Australian domestic market[268]

'Deliver into the Australian domestic market' is the term we use in this manual for when excisable alcohol products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[269]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable alcoholic beverages

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act.

As these guidelines deal with alcohol products, we have used the term excisable alcohol products or excisable alcoholic beverages.

Excisable alcohol products include:

  • beer
  • spirits
  • premixed drinks known as ready-to-drink (RTD) beverages
  • brewed beverages that are not beer, and
  • spirit for non-beverage use, including denatured spirit.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

  • Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return[270] is the document that you use to advise us:

  • the volume of excisable alcohol products that you have delivered into the Australian domestic market during the period designated on your PSP, or
  • the volume of excisable alcohol products that you wish to deliver into the Australian domestic market following approval.

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $170.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

10.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

10.7.1 Excise Act 1901

Section 4 - Definitions

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 25 - Only licensed manufacturers to manufacture excisable goods

Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence

Section 27 - Licensed manufacturers to manufacture only at licensed premises

Section 39D - Conditions of licence

Section 46 - Supervision by officers

Section 49 - Facilities to officers

Section 50 - Record keeping

Section 51 - Collector may give directions

Section 52 - Weights and scales

Section 53 - Responsibility of manufacturers

Section 54 - Liability to pay duty

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61A - Permission to remove goods that are subject to CEO's control

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 62 - Deficiency in duty

Section 77D - Spoilt beer

Section 77E - Removal of beer when licence ceases to be in force etc.

Section 77FC - Repackaged beer

Section 86 - Officers to have access to factories and approved places

Section 87 - Power to stop conveyances about to leave an excise place

Section 87AA - Searches of conveyances without warrant

Section 91 - Examine all goods

Section 92 - Seals etc. not to be broken

Section 106 - Samples

Section 117A - Unlawfully moving excisable goods

Section 117B - Unlawfully selling excisable goods

Section 120 - Offences

10.7.2 Excise Tariff Act 1921

The Schedule

10.7.3 Crimes Act 1914

Section 4AA - Penalty units

Section 6 - Accessory after the fact

10.7.4 Criminal Code Act 1995

Section 11.1 - Attempt

Section 11.2 - Complicity and common purpose

Section 11.5 - Conspiracy

APPENDIX A

The specific form of records you maintain is dependant upon the type and scale of your operations. The requirements listed below are indicative of the type of records or data that would ensure that you could account for all of the excisable alcohol products for which you are responsible. They are provided as a guide only.

Brew on Premises Shop operator

  • Raw Materials register
    • Malt (malted cereals)
    • Hops, hop extracts, and other bitters
    • Adjuncts (unmalted grains used in brewing beer which supplement the main mash ingredient)
  • Customer brew register
    • Customer identification details, e.g. name, address
    • Date of brew
    • Beer type, i.e. recipe name
    • Beer strength - derived from recipe and BOPS tests brews
    • Beer quantity (litres) - usually a standard 48 or 50 litre quantity
  • Sample and test brew register
    • Brew identification details, e.g. brew number, type, date
    • The raw materials used, to assist with tariff classification (quantity and description, e.g. 5 kg Crystal malt) - these may be located on a recipe sheet
    • Beer quantity (litres) - usually a standard 48 or 50 litre quantity
    • Beer strength - derived from recipe for sample brews and derived from another strength testing methodology for tests brews.


Excise guidelines for the alcohol industry
Table of contents
  ABOUT THIS GUIDE
  01 INTRODUCTION
  02 LICENSING: Applications
  03 LICENSING: Assessing applications
  04 LICENSING: Suspension & cancellation
  05 MOVEMENT PERMISSIONS
  06 PAYMENT OF DUTY
  07 REMISSIONS, REFUNDS, DRAWBACKS & EXEMPTIONS
  08 REVIEWS & OBJECTIONS
  09 OFFENCES
  10 BEER
  11 DISTILLATION
  12 SPIRITS AND OTHER EXCISABLE BEVERAGES
  13 CONCESSIONAL SPIRIT
  14 WINE
  FOOTNOTES


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