Wine Road Show 2017 – WET Reform
Fortified wines in process of being manufactured prior to 1 January 2018
Given the breadth and complexity of issues involved with the WET reforms, combined with the very limited allotment of time we had in the sessions to explain same, our presentation only considered the application of the Transitional Provisions to fortified wine that is bottled by 1 January 2018.
However, questions have been raised with respect to the application of the Transitional Provisions in relation to fortified wines that are still in the process of being manufactured at 1 January 2018.
For wine that is in the process of being manufactured into fortified wine, that is in tanks and barrels immediately prior to 1 January 2018, the wine in those tanks and barrels, at that date, will be taken to satisfy the ownership of source product requirement.
However, after 1 January 2018, the fortified wine being manufactured will need to continue to satisfy the new eligibility criteria, such as the 85% ownership of source product requirement, for the fortified wine to remain eligible for producer rebates.
Accordingly, producers will need to make sure that any wine added to those tanks and barrels after 1 January 2018, will not cause the fortified wine being manufactured to fail the 85% ownership of source product requirement.
In practice, this will mean that to claim producer rebates after 1 July 2018, fortified producers will:
- not need to retrospectively trace back the ownership of inputs used to make the fortified wine that was added before 1 January 2018; but they will.
- need to maintain records of wine added after 1 January 2018, so that they can demonstrate that at least 85% of the fortified wine, in total, was made from source product that the producer owned prior to crushing.
In claiming producer rebates under this Transitional Provision, fortified wine producers will still need to reduce the producer rebates they claim on account of any earlier producer rebates that the suppliers of the wine used to make the blend were eligible to claim on the wine they so supplied to the producer prior to 1 July 2018.
Producers must remember, however, that if the fortified wine is put into a bottle prior to 1 January 2018, the producer will only be eligible for producer rebates if the fortified wines are sold prior to 30 June 2025.
This Alert is intended as an alert only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.