Reform beckons for Aussie wine tax

The ‘Wine Equalisation Tax’ (WET) in Australia is to be reformed and the overseas marketing budget increased as part of the country’s new Federal budget.

Introduced in 2000 to give tax breaks to small wineries (a rebate that increased to AU$500,000 in 2006), many producers have claimed that larger estates have worked the system for their own benefit.

The result has been a “distortion” in wine and grape prices that left many small producers struggling.

A recent senate inquiry prior to the budget had found that the scheme was not working as originally intended.

Chris Byrne, chief executive of Riverland Wine, told the Australian Broadcasting Corporation: “What we witnessed were, I guess, opportunists, who were able to exploit the WET rebate…and as a consequence, we saw major distortion in both wine and grape prices.

“We refer to these as ‘virtual wineries’ that cropped up [and] were simply trading in wine rather than growing grapes.”

The government’s reforms will include lowering the rebate back to its original AU$290,000 level, shutting out bulk and unbranded wine from the rebate and altering eligibility criteria by July 2019 although the first round of reforms (lowering the rebate to AU$350,000) will come into effect by 1 July of next year.

The government also approved an extra AU$50 million to the budget for marketing Australian wine overseas.