Alcohol excise duty rates rise for fourth time

Alcohol excise duty rates are set to increase from Tuesday, 1 February for the fourth consecutive time.

Spirits and Cocktails Australia have responded to the hike by saying that "the Federal Government is “giving with one hand and taking with the other”.

SCA Chief Executive, Greg Holland described the pending excise hike of 2.1 per cent announced by the Australian Tax Office yesterday, as “brutal” at a time when many hospitality operators were struggling to remain afloat.

“Spirits producers in Australia are part of a hospitality ecosystem that is on its knees across the country, with many of our businesses battling the perfect storm of staff shortages, supply chain problems and depressed consumer confidence,” Mr Holland said.

Small distillers were relieved by last year’s Budget announcement which entitled brewers and distillers to a full remission of any excise they pay, up to an annual cap of $350,000. SCA say that it delivered about $20m in relief to craft distillers but that this is negated by this latest tax increase along with that from last August.

Mr Holland said these increases "effectively rake back more than five times that amount, about $100 million in revenue, this financial year. It looks like the government is giving with one hand while taking with the other.”

Australia has the third highest spirits tax in the world, after Norway and Iceland and SCA say that up to where up to 60 per cent of the retail price of an average 700ml bottle of spirits in Australia is tax.

Australian Distillers Association chief executive Paul McLeay said Australia’s spirits tax was a hindrance to the industry.

He said, “Most of our distillers are based in rural and regional areas and many of them could be employing more staff, buying more local produce, exporting more quality Australian products and attracting more tourists to their regions.

“On top of all of the challenges COVID has thrown at the hospitality industry, a fourth tax hike in two years feels like a kick in the guts.”

A joint campaign by Spirits and Cocktails Australia and the Australian Distillers Association has called on the Federal Government to freeze the excise increases for at least three years and align the spirits tax rate with the brandy rate to give the industry a chance to consolidate and recover from the devastating impact of the pandemic.

With the cost of doing business its highest in recent memory, Mr Holland said the tax changes would ease the inflationary pressure on spirits producers and hospitality, and provide the right economic conditions for driving investment and job creation to fuel the industry’s recovery.

Excise information and links

Businesses can view the new rates here and use the latest excise return here.

The ATO reviews excise duty rates for alcohol twice a year, in line with the consumer price index (CPI). Generally, indexation occurs on 1 February and 1 August.

The CPI indexation factor for rates from 1 February 2022 is 1.021.

Wine is not an excisable beverage. It's subject to wine equalisation tax (WET).

Takeaway beer concessions extended

In good news, the ATO has extended the takeaway beer concessions to support businesses in the alcohol industry affected by COVID19. The concession has been extended until 30 April 2022.

This concession allows alcohol service venues facing COVID-19 restrictions to repackage excise duty-paid kegged beer for takeaway sale in sealed containers (such as growlers) without needing:

• an excise manufacturer licence 
• to pay further excise duty. 

This concession applies to alcohol service venues operating under COVID-19 restrictions, for example where they:

• are restricted to takeaway service only
• have to apply to the four-square metre rule
• have limits on the number of customers allowed in an enclosed space.