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Federal Government Announces Revised WET Rebate Integrity Measure Amendments
Wines of Western Australia (WoWA) warmly welcomes today’s announcement by the Federal Government of important integrity reforms to the Wine Equalisation Tax (WET) rebate and supports those reforms. This is a good news story of Government and Industry working together to achieve optimum and balanced outcomes.
Senator Ruston is to be congratulated on the thorough and extensive consultation process that she has conducted with the wine industry since the announcement of these reforms in the 2016 Budget. This process highlighted the importance of the WET rebate to small premium wine producers, particularly those operating in regional areas where they are a critical part of their local economies and tourism infrastructure.
WoWA has worked with the Government on behalf of the fine wine regions in Western Australia to ensure that the reforms refocus and restore integrity to the WET rebate system and continue to provide relief to small premium winemakers from the burden of WET. WoWA has been instrumental in the formulation of key aspects of the reforms, in particular:
• the eligibility criteria which will ensureyoung and innovative winemakers can enter the market and;
• and the cellar door rebate scheme which will encourage producers to continue to invest in their cellar door operations and support their local tourism industry.
Moving the amendments out to July 2018 will allow wine producers to refocus their businesses operations. Considering the extent of the reforms, this is a well measured revision due to the long production lead times in the wine industry.
Everything in the revised policy is focused around returning the rebate to its original intent and the Government has absolutely nailed it. We look forward to continued discussions over its implementation, the $50m Wine Tourism and Export Development Fund and future taxation reviews.
At the local level, we would like to make a special mention to Senator Dean Smith, Senator Chris Back, Hon. Christian Porter MP, Nola Marino MP, Rick Wilson MP and Andrew Hastie MP for their grassroots input in assessing economic and social consequences in regional wine communities. These grassroots assessments were also supported by Premier Colin Barnett and local MP Libby Mettam.
The WET Rebate Implementation Paper released by the Federal Government on 2 September confirms the Government’s failure to recognise the importance of the wine industry to rural and regional communities and the significant damage that will be caused to small wine producers and their communities by the proposed changes to the WET Rebate.
In the 2016 Budget, the Government announced two major changes to the WET Rebate system that will hurt small wine producers and their communities. It plans to:
- Reduce the WET Rebate cap from $500,000 to $290,000 over two years; and
- Change the eligibility criteria so that only producers that own an interest on a winery can claim the rebate.
Both changes fail to recognise the valid reasons why the WET Rebate was introduced in 1999, and demonstrate a fundamental lack of understanding of how the wine industry operates and the importance of maintaining the support to small wine producers and their communities that the rebate provides. The first element is a clear revenue grab, while the second will disqualify over half the small producers in Western Australia from claiming the rebate at all.
The Western Australian wine industry supports reforming and refocusing the WET Rebate system to eliminate the market distortion that is currently occurring through the application of the rebate to bulk and unbranded wines, and by tightening eligibility for the rebate. Wine Equalisation Tax (WET), as a value based tax, places smaller fine wine producers at an enormous disadvantage relative to larger lower cost producers as it results in substantially higher tax being paid on high value fine wines relative to lower value wines. The WET Rebate was introduced to support smaller wine producers in regional and rural Australia with domestic sales, and to effectively exempt those wine producers from WET.
Wines of Western Australia (WoWA) has consulted extensively with wine producers in Western Australia and has released its position paper which outlines four simple proposals to restore the intent and integrity of the WET Rebate system. The Western Australian wine industry is made up of the type of businesses that the WET Rebate was intended to support – smaller regionally based producers who are the owners of the brands under which their production is sold. These businesses form an integral part of the regional economies in which they are based, generating significant employment and economic activity and supporting the local tourism industries.
WOWA’s proposals to refocus and restore integrity to the WET Rebate system are:
- Eliminate the rebate for bulk and unbranded wine by limiting the rebate to packaged, branded wine which is for sale to domestic customers – this element is supported by both the Government and the wine industry;
- Expand the existing eligibility criteria to provide that a producer must operate from a place of business in a wine region and maintain ownership and control of the grapes from which wine is made from the crusher to the finished bottled and branded product – the Government’s proposal that a producer must own an interest in a winery does not recognise the many legitimate business models used by smaller wine producers;
- Maintain the overall rebate of $500,000 but refocus it so that the full amount is only available on cellar door or direct sales, and introduce a limit within the cap on the rebate available for wholesale sales at $350,000, transitioned in over four years – the Government’s proposed reduction in the cap for legitimate producers will damage their viability and their ability to invest in their businesses; and
- Restrict access to the rebate to small and medium sized wine producers - the rebate was never intended to support large scale producers.
WoWA is consulting with representatives of fine wine regions in other states and has already received support for its proposals from a number of regional associations.
WoWA calls on the Government to include the WET Rebate cap in the consultation process and to focus its reform of the WET Rebate system on restoring the original intent of the rebate rather than adding complexity to the WET Rebate system or reducing the amount of rebate available to genuine small and medium wine producers. WoWA urges the Government to focus on integrity measures that do not prejudice the sustainability of regional wine communities, and to initiate as soon as possible meaningful discussion on reforming the basis of taxation of wine to a simpler and fairer system based on the volume of wine rather than the value of wine.
CEO - Wines of Western Australia
0448 884 161
President - Wines of Western Australia
0419 487 427
About Wines of WA
Wines of Western Australia provides support to wine producers and Regional Wine Associations in the development of their region.
The mandate of Wines of Western Australia is to ensure government and its relevant agencies understand the position of WA’s nine - premium wine growing regions on key issues affecting their interests and to leverage the collective voices to achieve enhanced success for the stakeholders.
THE HON JOEL FITZGIBBON MP
SHADOW MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY
SHADOW MINISTER FOR RURAL AND REGIONAL AUSTRALIA
SPOKESPERSON FOR COUNTRY CAUCUS
MEMBER FOR HUNTER
Consultations with Australia’s wine industry confirm on-going anger at the Government’s failure to consult over its proposed changes to the Wine Equalisation Tax Rebate.
In the 2016 Budget, the Turnbull Government announced two major changes to WET rebate arrangements. It plans to:
1. Reduce the rebate cap from $500,000 to $350,000
2. Declare only wine producers with a financial interest in a winery can claim the rebate
The first change is a revenue grab which will hit the bottom line of winemakers hard.
The second measure is sold as one designed to prevent rorting but will hit hard honest grape growers who sell wine under their own label produced by a contracted winery.
Like the backpacker tax, the Government has failed to consult and poor policy is the outcome.
It’s time for this Government to undertake some meaningful discussion with those who are the backbone of our wonderful wine industry.
CONTACT: NATASA SIKMAN 0467 550 065
In the 2016 Federal Budget, the Government announced changes to the WET Producer Rebate (WET Rebate). Wines of WA (WoWA) supports the policy objectives behind the changes, namely addressing integrity concerns, better targeting support, and tightening eligibility for the WET Rebate. However, following extensive consultation with local industry, WoWA is very concerned about the direct and indirect consequences of the announced changes for regional growth and development, and regional communities. These consequences, which we believe are unintended, will have significant negative social and economic impacts in Australia’s regional communities in which wine producers are based.
Industry consultation included:
• A survey of producers conducted by RSM Australia.
• Industry “town-hall meetings” facilitated by Wines of WA and WA Members of the Federal Government. These meetings formed part of an informal consultation process by the Federal Government. Senator Anne Ruston visited most wine producing states in June 2016. The process included 4 meetings in the following regions and towns: Mt Barker, Pemberton, Busselton and Swan Valley.
• Extensive written and verbal communications with Regional Wine Associations. The positions documented in this paper have been ratified by all fine wine regions in WA.
The paper has the endorsement of all WA Regional Wine Associations.
• the negative impacts on WA producers that will result from the proposed changes and;
• alternative amendments that will achieve the same revenue outcomes for government while re-focusing the rebate back to its original purpose of supporting small and medium wine producers in regional and rural Australia
The paper will be distributed to all state and regional associations in Australia and to all relevant government, opposition and cross-bench members and will inform all discussions supporting the position of WA growers and producers.
For further information, contact Redmond Sweeny - 0419 487 427
Following the announcement of proposed changes to WET legislation in the 2016 Budget, Wines of WA and Regional wine associations consulted widely with WA wine producers to determine the likely social and economic consequences of the changes.
A survey of producers managed by RSM Australia on behalf of the WA wine industry provided detailed information clearly outlining that a “perfect storm of unintended consequences … and extreme rationalisation” would occur if the proposed changes were to be implemented as outlined in the Budget.
Wines of WA requested urgent consultation with Government to present this information and further discuss how WET legislation could be amended to achieve revenue savings while tightening eligibility criteria and returning the Rebate to its original – to support regionally based small and medium wine producers.
Federal members Nola Marino (Forrest), Rick Wilson (O’Connor) and WA Senator Dean Smith invited Senator Anne Ruston, Assistant Minister for Agriculture and Water to visit WA wine regions to discuss the issues with WA producers. Senator Ruston accepted their invitation.
From Tuesday to Thursday this week, the Senator toured WA wine regions, conducting town hall meetings in Mt Barker, Pemberton, Busselton and the Swan Valley. Producers’ shared their views on the proposed changes and outlined how these would affect their businesses and regions. Summarising the common themes, Wines of WA President, Redmond Sweeny said’ “producers are extremely concerned with the proposed definition of an eligible producers (who can receive the WET Rebate) and the stepped reduction in the amount of Rebate a producer can claim each year. In dollar terms, the effect of the two issues combined would be the direct removal of up to $17 million dollars per year from regional WA towns. In social terms, the flow on effects to jobs and other businesses will be significant. Further work is being done to determine the extent of this impact.”
Senator Ruston spoke to producers across scale of production representative of the WA wine industry. On conclusion of the tour she said, “I have heard their concerns. The industry now needs to work together to gain consensus on how WET legislation should be amended. I can then come back and formally consult on the eligibility and Rebate Cap issues. In caretaker mode during an election, I can only promise to do so if re-elected. I have committed to this if the coalition is re-elected and I maintain my position as Assistant Minister.”
In the 2016/17 budget, the Federal Government announced a range of measures it intended to introduce to address reforms to current WET Rebate legislation.
Some of the proposed measures and initiatives are welcome and go a long way towards addressing industry and government concerns with the way the rebate currently operates. However, as a high value, fine wine production industry, there are 2 items that would have disproportionately negative economic and social consequences in Western Australia.
1. Reduction in the WET Rebate cap; and
2. Eligibility criteria for the WET Rebate that would stifle innovation and the next generation of wine producers
As an industry we note and welcome the Government’s commitment to a full consultation process when addressing these issues.
As announced in our press release on the 6th May, we will measure the significant negative economic and social impacts that these proposed changes may have on the WA wine industry via a survey to the WA Wine Industry.
The survey will be administered by accounting firm RSM Australia and will determine:
- how many producers would be affected by changes to eligibility for the rebate (not withstanding the consultation process on eligibility);
- how many producers would be affected by a reduction in the cap on the rebate and its total value;
- the quantum of rebate lost via cellar door and;
- the likely impact this would have on jobs and future regional development in WA
- the likely impact the above would have on regional tourism in WA
The WA wine industry is a $700 million industry providing significant economic flow-on benefits to the mainly regional areas in which it operates.
It is essential that the federal government is fully informed of the potential economic and social consequences of the proposed changes in Western Australia.
We look forward to presenting the data to industry and government and look forward to fully participating in the consultative process.
Wines of Western Australia (WoWA) welcomes the introduction of WET rebate integrity measures that reflect our core principles for WET reform. We believe the new measures will address market distortions surrounding the rebate.
We note also that the Government has listened to WoWA by allocating a portion of the $50 million marketing recovery plan to regionally based wine tourism activities. We look forward to continued dialogue on this allocation.
We reinforce our support for the new measures, including:
- Maintaining the rebate under WET legislation and not a burdensome grants scheme.
- $50 million dollars over 4 years to support growing export demand for Australian wine and promoting regional wine tourism. Wines of WA advocated strongly for a portion of these funds to be delivered directly to regional marketing and are pleased to see this included in the budget.
- Introduction of stronger anti-avoidance provisions to remove access to the rebate from contrived arrangements;
- Tightening the eligibility criteria in line with the rebate's original intent to support small regionally based winemakers with branded product who have made significant, ongoing investments in regional Australia and removing the rebate for bulk and unbranded wine.
The WA wine industry looks forward to further consultation on the finer details of eligibility criteria for small producers. We are encouraged that this process will occur to ensure genuine small wine producer participants who are delivering ongoing investment and jobs in regional Australia are not excluded. It is imperative that this consultative process is completed as soon as is practicable to provide investment certainty for industry.
The Government has elected to reduce the cap back to its original rebate level of $290,000 by July 2018. We do not and did not support this. A discussion about a fairer and simpler taxation mechanism is now required. Preliminary estimates indicate WA will be disproportionately affected by this measure with 60 to 70 producers now worse off. We will be providing further economic data to the Government in due course to support our position that the cap should remain at $500,000. We request that the government should remain open minded to our position on delivering the full $500,000 rebate to small winemakers in regional areas as we transition from the mining boom. When we couple this with the legal inability to solve the rebate going to New Zealand, our continued dialogue with government will examine this issue of equality. With the full rebate in place, WA’s fine wine producers will contribute significantly to the government’s national economic plan announced on Tuesday night.
The core principles for WET Rebate reform set out in the attached pre-budget media statement remain the position of the WA wine industry.
For further information, contact:
President Wines of WA
08 9284 3355
In 2011 the Licensing Authority introduced Approved Manager Identification Cards which were granted for a period of five years. As a result cards will start to expire from June 2016.
The Department will carry out the approved manager card renewal process in stages:
- An email will be sent four months prior to card expiry requesting those managers whose details have changed to update their information via their online account (Note: those managers whose cards expire in June should have already received their emails); and
- Approximately three months before a card’s expiry date, a notice will be sent to the card holder requesting they complete the approved manager will be required to respond to a series of questions relating to their card renewal process has been completed, the card will be valid for five years from the original expiry date.
It is important to note that only those managers who have received a renewal reminder will be able to undertake the renewal process as those outside the 90-day expiry period will not have had a renewal option added to their account.
It is imperative that the department has current email and postal addresses of all approved managers.
Failure to renew an identification card before the expiry date will result in the manager no longer being able to work as an approved manager in Western Australia.
Licensees are reminded to check the approved manager credentials of their staff as it’s their responsibility to ensure they have an approved manager on the premises at any time that the business is being conducted. Failure to do so may result in a maximum penalty of $10,000.
For more information go to – www.rgl.wa.gov.au