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May 16, 2016

In light of last week's Australian budget, here are the key points regarding the proposed changes to the Wine Equalisation Tax (WET) Rebate policy.

-  Bulk and unbranded wine will become ineligible for WET Rebates.

-  The WET Rebate will be retained.  Volumetric Tax will remain on the back backburner.

-  Wine Australia will be provided with $50 million over four years to promote
Australian wine overseas and very importantly, for promoting wine tourism within

-  Tougher anti-avoidance measures will be introduced immediately to help deter multiple rebate claims through artificial business structures.

-  The definition of rebateable wine will be toughened to ensure at the time of transaction the wine must be fit for retail sale packaged in a container of not more than five litres and be labelled with the brand, owned by or licensed to the producer.

-  The definition of an eligible producer will also be tightened.  Indications are that a wine producer must own a winery or, be a long term lessee of a winery and must sell packaged, branded wine domestically.

-  Under the new rules claims for the WET Rebate will apply to all wholesale sales not just cellar door sales.

-  Although New Zealand producers remain eligible, the tightening of the definitions on bulk and unbranded wine will diminish the competitive advantage
NZ producers have enjoyed for the past decade.

-  The proposed changes will save the government an expected $250M net over the forward estimates after providing for the $50 Million boost to marketing.

-  The new eligibility definitions for rebateable wine and eligible producers will not take effect until July 1, 2019.

-  The reforms announced, include plans to reduce the rebate cap from $500K to $350Kin 12 months and then down to $290K by July 2018.  Industry will continue its dialogue with government in relation to these 2 aspects of the reforms.


Source:  Capital Markets