05/05/2021 - 15:30

Tax relief gives brewers, distillers room to grow

05/05/2021 - 15:30

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Western Australian craft beer and spirits producers have welcomed the federal government’s decision to increase tax relief for the industry, but some say more change is needed.

Tax relief gives brewers, distillers room to grow
The move means breweries and distilleries will have similar tax relief measures to wine producers. Photo: Attila Csaszar

Western Australian craft beer and spirits producers have welcomed the federal government’s decision to increase tax relief for the industry, but some say structural changes to the tax system are still needed.  

Treasurer Josh Frydenberg announced the federal government would triple the excise refund cap for small brewers and distillers from $100,000 to $350,000 per year.

From July 1 2021, eligible brewers and distillers are entitled to receive a full remission of any excise they pay, up to an annual cap of $350,000.

The move means breweries and distilleries will have similar tax relief measures to wine producers.

Blasta Brewing Co sales manager Mike Morgan said it would make a huge difference to the brewery’s operations.  

He said up to $250,000 could go back into the business, which could be spent on tanks, logistics and new staff.

“It’s a fantastic move,” Mr Morgan told Business News.

“It’s something that’s been lobbied really hard for nationally by the Independent Brewing Association as well as by us.

“Independent and smaller brewers like ourselves employ thousands and thousands of people across Australia, so it’s a massive thing for the government to show faith in our industry and support it, knowing it has a lot of jobs in it [and] could create more jobs, the more successful and efficient we are."

Spirit of Little Things head distiller Tom Martin said the move would allow the relatively new distilling industry to grow.

“Our Australian distilling industry is where the wine industry was 20-30 years ago,” he said.

“We already boast Australian distillers that are recognised internationally and we’re confident the excise relief will help us at Spirit of Little Things to expand our footprint and become world renowned.”

According to Business News’s Data & Insights, 16 distilleries have been established in WA in the past five years, including Spirit of Little Things and Republic of Fremantle.

Whipper Snapper Distillery managing director Alasdair Malloch said while the decision would provide producers with the resources to increase production and target exports, the government had not addressed the underlying tax issues.

“What we really need is structural reform of the way alcohol tax is done in this country,” Mr Malloch told Business News.

“The inconsistency of application between products; the way wine is taxed is different from the way beer is taxed, which is different to the way spirits are taxed.

“And yet, a standard drink is a drink, it doesn’t matter what it is.”

According to the Australian Taxation Office, the excise rate for full-strength beer is $51.77 per litre of alcohol and $87.68 per litre of alcohol for spirits.

Wine is subject to the Wine Equalisation Tax, which is 29 per cent of the wholesale value.

Mr Malloch said the government had provided a bandaid solution and the different excise rates would continue to be a problem for distillers, as their tax rate increased faster than other alcohol producers.

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