WET Rebate Reform - WoWA response to WET Rebate: Tightened Eligibility Implementation Paper

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.

Larry Jorgensen
CEO - Wines of Western Australia
0448 884 161

Redmond Sweeny
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.

Wines of Western Australia Wine Equalisation Tax Position Paper August 2016

Measuring the Impact - the economic and social consequences of WET Rebate reform in Western Australia

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.

 These are:

 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.

Larry Jorgensen
Chief Executive Officer
Wines of WA
T – 08 9284 3355
E – ceo@winewa.asn.au
W – www.winewa.asn.au

Confirmation of Approved Manager Personal Details and Renewal Process - Department of Racing, Gaming and Liquor

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:

  1. 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
  2. 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