From 1 July 2018, to qualify for the WET producer rebate on assessable dealings of wine, a producer must meet new eligibility criteria.
There are separate criteria for:
For Museum stock sold on or after 1 July 2018, a producer will not be subject to the 85% Ownership requirement if all the following apply:
All assessable dealings of Museum stock or sparkling wines made from 1 July 2023 will need to satisfy all the new eligibility criteria including the 85% Ownership requirement. This will make it difficult for some producers to claim the producer rebate on such wine dealings as they will need to have sufficient documentary evidence that they owned the source product used to make the wine prior to crushing.
The main producers of Museum stock who will be affected include:
If you are a producer of Museum stock you need to determine whether or not you will meet all the criteria from 1 July 2023, and if you don’t, ensure that your mark-ups (marked-up price) are sufficient enough to cover the lost producer rebate as well as the additional storage costs incurred over the years the wine is held.
1. Must be the producer of the wine; and
2. Packaging requirement – wine must be:
3. WET payment requirement - There must be a WET liability for the assessable dealing, or the purchaser of the wine issues a quote to the producer stating they intend to make a taxable dealing with the wine; and
4. 85% ownership of source product requirement – producer must own at least 85% of the source product used to make the wine at all times, from immediately prior to crushing, right through to packaging.
A small wine producer has 2016 Museum stock on hand and doesn’t have records of the source product making up the vintage. They want to know whether they are eligible to claim the producer rebate, and if not, how much markup is required to break even with if they were eligible.
Please contact George Papanicolaou or your Nexia Edwards Marshall Advisor who will be able to assist you check your eligibility to claim the producer rebate on Museum stock as well as assist identify strategies which can be implemented early including considering tax planning, cash flow forecasts as well as marketing and promotion opportunities.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.