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Let’s demystify the recent WET Rebate changes

Let’s demystify the recent WET Rebate changes

Anna Chong discusses the recent Wine Equilisation Tax (WET) rebate changes effective from 1 July 2018.

Anna Chong

Director, Enterprise

KPMG Australia


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Wine bottles being labelled.

After two years of consultation with the wine industry, the Treasury Laws Amendment (2017 Measures No4) Bill 2017 received Royal Assent on 23 August 2017 to:

  • reduce the annual maximum rebate from $500,000 to $350,000 and
  • tighten the rules regarding the Wine Equalisation Tax (WET) rebate entitlement.

The amendments will be effective from 1 July 2018.

New WET Rebate eligibility criteria

Broadly, under the new law, to be entitled to the producer rebate (amongst other criteria):

  • the producer must own at least 85 percent of the source product of the wine throughout the wine-making process
  • the wine must be packaged in a container less than 5 litres and
  • the packaged wine must be branded by a registered or common law trademark, that is owned by the wine producer or its associates.

Producer rebate is ultimately offset by WET paid

To ensure WET is ultimately paid in circumstances where a producer has claimed the WET rebate, WET will be payable at each stage of the supply chain (instead on the last wholesale sale only) unless the wine is:

  • sold without a producer rebate being claimed by a producer or
  • purchased under a valid WET-free quotation.

Further, seven existing grounds for a WET credit will be removed. The Australian Taxation Office (ATO) will update the existing public WET rulings to reflect these changes in late October which should provide more guidance on the application of the new law.

Key recommendations

We recommend you:

  • review your current sources of grapes/ingredients, and consider whether a restructure of your sourcing arrangements is required
  • retain sufficient documentary evidence to support the 85 percent ownership test, particularly where sources of wine are ‘pooled’ or ‘blended’
  • review your trademarks (both owned or under licence)
  • review your WET credit entitlement
  • consider the impact of the new quoting system on your business cashflow and
  • assess the competency of your existing business systems, especially invoicing, and separating and tracking wine purchases that are made under WET-free quotes versus non WET-free quotes.

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