By Andy Young

Last week as part of his first Federal Budget the Treasurer, Scott Morrison, announced a number of changes to the Wine Equalisation Tax (WET) rebate.

The changes include a tightening of the eligibility criteria and a reduction to the amount of rebate over the next two years. One analyst has argued that the changes could have serious repercussions for cellar doors.

Des Caulfield, a director at accounting and business advisory firm MGI, believes the reforms could prove costly for many cellar doors.

“This could be the Death of the cellar door,” Caulfield said. “The changes to the WET rebates will make a substantial difference to small producers – the WET rebate will come down from a maximum of $500,000 to a maximum of $290,000 over the next two years. It will reduce to $350,000 on 1 July 17 and then to $290,000 on 1 July 2018.

“Anyone not making their own wine, but selling under their own label will not be eligible for the WET rebate from 1 July 2019." 

He added: “The Government is endeavouring to stop much of the current rorting of the WET rebate system with these measures and, to the extent that it removes the rebate where eligibility has been artificially created, it is welcomed. However we believe that it will impact on many genuine wine sellers who may be too small to be able to afford their own wineries but who are genuine winemakers. A number of these operate cellar doors and these changes may result in such vendors being uncompetitive and hence going out of business.

“Eligible New Zealand producers can continue to claim the WET. Many Australian winemakers are about to suffer a substantial reduction in WET rebates and yet Australia continues to subsidise foreign manufacturers. It has been Government policy to reduce subsidies to many Australian industries. There appears to be no logic in WET rebates for New Zealanders.

“The decision in the budget to provide $50 million over four years for promotion of Australian wines overseas and in wine tourism at home is welcomed. It is not yet clear how individual wineries may be able to take advantage of this. The saving made to the Government from these measures is estimated by Treasury to be $300 million over the same four years.”

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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