If you’re a wine producer operating in Australia, you’re likely familiar with goods and services tax and excise tax. But what about the Wine Equalisation Tax (WET)?
Managed by the Australian Taxation Office (ATO), WET is designed to boost industry competitiveness and promote local wine production and support regional communities.
If you make, import, or sell wine in Australia, you’ll likely need to pay WET. But what is it?
WET is a type of tax levied in Australia, designed to be paid on the last wholesale of wine between the supplier and the retailer. WET may also apply to cellar door sales or tastings. It is also payable for wine importation regardless of whether you are registered for GST or not.
As of writing in April 2023, WET is a tax of 29% and in most cases only payable if you are registered for GST. A rebate is available for eligible Australian wine producers.
WET is collected by the ATO to create a level playing field for wine producers, ensuring that all imported wine is subjected to the same tax rules as locally produced wine. The tax is typically added to the price of wine bought and sold in Australia. This is because the tax is paid on the last wholesale sale of the wine, so when a retailer would buy the wine from a wholesaler.
Wine wholesalers don’t just pay WET. They are also subjected to additional wine taxes, including excise tax and goods and services tax (GST).
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Most goods and services sold or consumed in Australia are charged GST, which as of April 2023 is a tax of 10%. Businesses registering for GST must collect this extra tax from their customers, which is then paid to the ATO when due.
GST turnover is the gross income made by your business, including all sales made in Australia. When registering for GST, you’ll need to report and pay the tax to the ATO regularly, issuing tax invoices and complying with other GST-related obligations.
As a business, you only need to register for GST if:
If none of these factors applies to your business, registration for GST is optional.
Not all alcoholic products sold in Australia are charged WET. Only certain types of wine products qualify when they have a volume of more than 1.15% of ethyl alcohol, including:
Alcoholic drinks like beer and spirits are not part of WET. However, they may be subject to additional taxes, including excise and customs duties.
Calculating WET is simple since taxes are set at 29% of the wholesale value of the wine (the price at which the wine is sold by the importer to the wholesaler) for all retailers. This price excludes GST. GST for wine is calculated on the WET-inclusive price.
To calculate how much WET you’ll pay, use the following formula:
WET = Sale price of wine x 29%
Let’s look at an example. Penelope is a wine producer selling 10 cases of wine to a bottle shop. The sale price is $150 per case, so the total sale price of the wine would be $1,500. In this case, the WET calculation would be:
WET = $1,500 x 29%
Using this calculation, Penelope’s WET cost would be $435 for this wine sale.
This means the WET-inclusive price is $1,935.
As a wine producer, Penelope can add the 29% WET rate to the sale price of the wine and then calculate the GST on the WET-inclusive price.
To calculate GST you would use this formula:
GST = WET inclusive price x 10%
GST = $1,935 X 10% = $193.5
So the final wholesale selling price is $2,128.50
As an Australian wine producer, you may be eligible for a producer rebate of WET depending on whether you meet the correct criteria. The maximum amount you can claim as a wine producer, as of writing, is $350,000 per year.
Different criteria apply depending on the winemaking process.
To be eligible to claim the WET producer rebate, you must:
To be eligible for the WET producer rebate on 2017 and earlier vintage wines, you must:
To claim the rebate, you must lodge a WET return with the ATO, including the rebate amount. The ATO will then process your return and pay the rebate amount to you.
Quickbooks is designed to simplify record-keeping and tax calculations for businesses by providing integration with ATO and automatic payment tracking.
Using the QuickBooks mobile app, you can also conveniently track your expenses in real time and access your business finances on the go. Ready to streamline your shareholder tax filings with innovative accounting software? Sign up for QuickBooks today with a free 30-day trial.
Read more with our guide to import taxes in Australia.
While every care has been taken to ensure the accuracy of the information presented as at , Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.
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