WET Rebate round 4 – a new, somewhat fairer deal released

WET Rebate round 4 – a new, somewhat fairer deal released

Following months of lobbying and consultation, the federal government today announced new updates to the WET rebate reforms from this year’s budget.

For a bit of context, have a read of how the saga originally played out in my series of posts here, here and here. Suffice to say many in the wine industry will appreciate these updated reforms.

The changes are threefold, covering a few contentious points. Firstly, eligibility to access the WET rebate (a major issue with the initial proposals), a slower phase in before the changes happen and a lifting the WET rebate cap. That cap is still down from the previous $500k p/a but higher than the proposed $290k p/a. Plus there is now an additional $100k buffer for those producers with a cellar door.

You can read the full press release here.

Of particular note is how the rebate eligibility has been structured. Effectively eligibility will be based on three criteria being satisfied:

• Eligible producers must own 85% of the grapes at the crusher used to make the wine. They must also maintain ownership throughout the wine making process.
• Rebate is limited to branded packaged wine, in a container not exceeding 5L, and branded with a registered trademark for domestic retail sale.
• The Rebate claims must be better linked to the WET being paid.

That last point seems particularly vague but is obviously an attempt to link branded wine to fruit.

The calculation ‘at the crusher’ means that all producers need to do is to prove that they have ‘owned’ the process. So either purchased/grown the fruit, made the wine/paid for the winemaking and then bottled it/paid for someone else to bottle the wine. It’s a clever proposal, as there is no requirement for asset ownership, just a paper trail from fruit to bottle.

Loopholes will eventuate, but on the whole this seems to be an improvement on the very regressive original reforms. Still, dropping WET altogether would be better for the industry as a whole, but don’t count on that happening anytime soon…

UPDATE 3/12/16: It has also been suggested that the eligibility will also be linked to a trademark. At this stage that’s not confirmed, but if it is, then it’s a significant extra cost. I foresee a rush on wine trademark lawyers over the next 18 months if it is confirmed…