Taxpayer alert: WET producer rebate schemes - TA 2013/2
On 8 October 2013, the ATO issued Taxpayer Alert TA 2013/2 entitled "Wine equalisation tax (WET) producer rebate schemes".
The Taxpayer Alert describes two contrived arrangements that are designed to create additional Wine Equalisation Tax (WET) rebates through non-commercial dealings between entities. The Alert states:
"Wine Equalisation Tax (WET) generally applies on the last wholesale sale of wine. A producer rebate is available in certain circumstances to producers of wine to a maximum of $500,000 in a financial year. This limit also applies to a group of 'associated' producers.
The arrangements are structured so that producers or groups of associated producers claim multiple rebates that combine to exceed the $500,000 limit.
The first arrangement involves a wine producer arranging for another entity to be the producer of some of its wine. The other entity has no real role in the manufacturing process and sells the wine produced to the wine producer for resale to third parties. Both entities then claim rebates, even though the wine is actually manufactured by the wine producer.
In the second arrangement, the wine producer sells wine to other entities for blending or further manufacture. However it is the wine producer who organises and controls all the blending or further manufacture. Sales of the blended or further manufactured wine occur between the entities within the arrangement. All entities claim rebates on the sales of the wine even though it is actually manufactured by the wine producer.
The ATO is conducting compliance action on these arrangements and considers that these arrangements may not be effective in creating additional rebate entitlements for the entities involved."