Guidelines for the payment of subsidies under s177 of the Liquor Control Reform Act 1998.
The Victorian liquor subsidy scheme was introduced in Victoria to offset the impact of a series of Commonwealth tax changes on the Victorian wine industry. Since 1997, the Victorian Government has paid Victorian wine producers a subsidy on certain retail sales (cellar door and mail-order sales) and ‘applications to own use’ of their own product. The Victorian Government has also paid a subsidy to wine makers or wholesalers for the sale of low alcohol wines.
The scheme provides a subsidy of:
- 15% of the notional sale price of cellar door and mail order sales and applications to own use of wines made by Victorian wine producers, and
- 12% of the last wholesale price of low alcohol wine sales made by wine producers or wholesalers in Victoria.
Subsidy payments are made under section 177(1) of the Liquor Control Reform Act 1998 (the Act), which authorises the payment of:
- amounts determined by the Treasurer to persons who hold, or have held, licences (whether granted under the law of Victoria or of another state or of a territory) relating to the sale of liquor in respect of which taxes have been paid to the Commonwealth.
While the Treasurer has statutory responsibility for payments and the statutory power to require information needed to make these payments, the Commissioner of State Revenue is responsible for administering this scheme.
These guidelines set out the basis on which a subsidy will be paid and the obligations imposed on those claiming the subsidy. They should be read in conjunction with the Commissioner’s Determination under section 179(1) of the Act and the Liquor Subsidy Claim Form 01 that contains the Commissioner’s requirements as to the records that must be kept.
Licensing and tax requirements
In effect, section 177(1) establishes two broad statutory requirements:
- the claimant must hold or have held a liquor licence (‘the licensing requirement’), and
- the claimant must have paid Commonwealth taxes (‘the tax requirement’).
The licensing requirement
The licensing requirement ensures that the State Revenue Office can be satisfied that the supply for which the subsidy is claimed was duly authorised under a current Victorian licence. In Victoria, sales or uses for which a subsidy may be claimed can occur under the following licences:
- a pre-retail licence, issued under section 12 of the Act,
- a producer’s licence, issued under section 13 of the Act,
- a limited licence, issued under section 14 of the Act.
When claiming a subsidy in relation to particular sales or uses, the licensee must identify the liquor licence(s) under which supply was authorised. A claimant’s initial application for a subsidy should be accompanied by a copy of all relevant licences under which eligible sales or uses are claimed.
As the Victorian scheme provides assistance once the relevant Commonwealth tax has been imposed, paid and, if applicable, rebated, the Victorian scheme uses the Commonwealth tax framework to establish the point at which a claim for the Victorian subsidy can first be made. For explanations of WET and excise duty, claimants are referred to the relevant WET and excise legislation Rulings. For guidance on record-keeping requirements and the information required from claimants see the instructions detailed on the Liquor Subsidy Claim Form 01.
The Victorian liquor subsidy is intended to offset the price impact of WET or excise duty, two mutually exclusive Commonwealth taxes imposed on the sale of certain wine products and alcoholic beverages respectively. WET is imposed on wine sold for consumption in Australia, while excise duty is charged on goods (including certain types of alcoholic beverages) manufactured in Australia. Wine that has an alcohol content of over 1.15% is subject to WET, while certain alcoholic beverages with an alcohol content of over 1.15%, such as beer, spirits and some fortified wines, are subject excise duty.
As the subsidy is intended to offset the impact of Commonwealth taxes, transactions that are WET-exempt, or on which WET is not charged, should therefore not be claimed.
Commonwealth Producer Rebate
Since October 2004, the Commonwealth has offered a rebate on WET to wine producers.
A wine produce, as defined under the WET legislation, is eligible for the Commonwealth producer rebate on eligible, rebatable sales on which WET has been or could be charged.
The Commonwealth rebates 29% of the wholesale price or, for retail sales and applications for the producer’s own use, 29% of the notional wholesale selling price (see the WETR 2009/2 Ruling on the Australian Taxation Office website). From 1 July 2018, the amount of the producer rebate is capped at $350,000 per annum. Before 1 July 2018, the amount of the producer rebate was capped at $500,000 per annum.
In relation to transactions on which WET has been paid, the subsidy is only available once the Commonwealth producer rebate has been exhausted.
An entity must have exhausted the Commonwealth producer rebate before that entity makes a claim on the Victorian subsidy. The subsidy should not be claimed for a sale or use for which a Commonwealth rebate has already been claimed.
In some circumstances, a sale or use may be eligible for a subsidy in more than one state. However, only one claim may be made in relation to a particular sale or application for own use, irrespective of the jurisdiction in which it is made.
The subsidy should not be claimed for a sale or use for which a subsidy has already been paid in Victoria or another Australian state or territory.
Commonwealth Wine Tourism and Cellar Door Grant
On 2 December 2016, the Wine Tourism and Cellar Door Grant was announced by the Commonwealth. It is administered by Wine Australia and commenced on 1 July 2019.
Under the grant, eligible producers are able to access an annual grant of up to $100,000 (GST exclusive) for their eligible rebatable domestic cellar door sales. Total funding under the grant is capped at $10 million each financial year.
In relation to transactions on which the grant has been accessed and claimed, if a producer has a shortfall under the Wine Australia Grant (i.e. they receive less than the amount of eligible transactions claimed), they are still eligible under the Victorian Liquor Subsidy for the amount of the shortfall only.
The recipient of a subsidy payment must also comply with invoicing and record-keeping requirements.
The invoicing requirement
The Victorian Government requires subsidy recipients to acknowledge the subsidy on its invoices. The Liquor Subsidy Claim Form 01 sets out the form that this acknowledgement should take.
Applicants are required to provide information required to determine claims for payment and to produce any document required for that purpose (section 178(1)). The information required for the determination of subsidy claims is set out in the State Revenue Office's Liquor Subsidy Claim Form 01. It is an offence under section 178(2) for an individual or body corporate to give information or produce any document that is false or misleading (the statutory penalty is 500 penalty units for a body corporate or 100 penalty units for an individual).
The Commissioner is authorised under section 179 to determine the class of persons who must make a record of sales and purchases of liquor. The Commissioner’s Determination requires all subsidy recipients to make and keep records of sales and purchases. These records must be kept for 5 years, unless the Commissioner authorises the destruction of records prior to that time. It is an offence under section 179(3) of the Act for an individual or body corporate to fail to make or keep a record as required, or to include in it any information that is false or misleading (the statutory penalty is 500 penalty units for a body corporate or 100 penalty units for an individual).
The Commissioner is responsible for setting the details and form that these records should take and they are set out in the subsidy Liquor Subsidy Claim Form 01.
A person who does not satisfy all the requirements set out in these guidelines, but who nevertheless believes they should receive a subsidy in respect of sales on which WET or excise has been paid, may submit a claim to the Commissioner of State Revenue outlining:
- the basis on which the claim is made, and
- the circumstances giving rise to the claimant’s failure to meet the requirements set out in these guidelines.