Budget to provide relief for small brewers and distillers

Small brewers and distillers are set to benefit from $255 million in tax relief as part of the 2021-22 Budget. Treasurer Josh Frydenberg's office released the announcement on Friday that the excise refund cap for small brewers and distillers will be tripled, increasing from $100,000 to $350,000 per year. 

Currently, eligible brewers and distillers are entitled to a refund of 60 per cent of the excise they pay, up to an annual cap of $100,000 but from 1 July 2021, eligible brewers and distillers will be able to receive a full remission of any excise they pay, up to an annual cap of $350,000.

This increase will align the benefit brewers and distillers with the Wine Equalisation Tax (WET) Producer Rebate.

There are around 600 brewers and 400 distillers across Australia, with around two thirds operating in rural and regional areas and the government cites that around 15,000 Australians that are currently employed in the sector. The relief country will also serve to support businesses severely impacted by COVID-19. 

The Independent Brewers Association, Australian Distillers Association and Spirits and Cocktails Australia have all welcomed the announcement saying that it will help drive down the jobless rate.

"Today’s investment from the Morrison Government is helping to rebuild an Australian-owned beer industry that will turbo-charge growth and deliver skilled jobs in family owned, independent breweries around the country,” said Independent Brewers Association (IBA) Chairman and founder of Sydney-based Wayward Brewing Co, Peter Philip.

“Excise tax is the single largest component of the cost of making a litre of beer, and it’s one of the highest beer taxes in the world. With this change, small brewers will be able to invest more in people, equipment, and facilities to meet growing demand,” he said.

The IBA says that even after the rebate, independent brewers are forecast to contribute more than $200 million in excise to the government in the 2022 financial year, growing to more than $300m in FY2025.

“This new incentive will accelerate the resurgence of an Australian-owned beer industry, while giving consumers more home-grown choices. Consumers want to support local businesses that keep profits in Australia, which is why Australian beer lovers should look for the IBA Independent Seal for confidence that the beer that they are buying is independently owned,” Philip added.

For distillers, Australian Distillers Association president Stu Gregor said: “It means craft distillers will have more capital available to help their businesses grow and to employ more locals – bringing important economic benefits through job creation, expanding farm production, regional tourism and hospitality for our communities."

But Spirits and Cocktails Australia chief executive Greg Holland suggests that there is still a way to go. 

“The best alcohol tax system is a fair one, so we thank the Government for bringing the incentives offered to small distillers and brewers in line with those offered to small wine makers. However, we note that Australia’s alcohol tax regime remains fundamentally flawed and unfair, imposing a spirits tax that is already ten times higher than the US rate, and 68% higher than New Zealand’s, with further increases every six months," he said.

“We look forward to continuing to work with the Government toward a fairer and more sustainable spirits tax regime – one that aligns spirits tax rates with brandy, and freezes CPI increases – to create jobs, investment and export opportunities in a burgeoning Australian industry.”