Money
Issue No. 18 - August/September 2004
Taxing Times
Tax matters - keeping you up to date
by John Rawson
A bit WET
Draft legislation on the new Commonwealth rebate for wineries was introduced to Parliament in June. While the proposed law clears up some unanswered questions, many questions remain.
If you are a winemaker or wine merchant, the detail of the rebate can be very confusing.
- Some wineries that have not previously had any WET liability (because customers ‘quoted’) are now eligible to claim the rebate. However, the rebate does not apply to wineries that export wine or to wineries that sell wine for export by the purchaser.
- Where wine is sold by one winery to another winery, rebates may be obtained twice for same wine.
- The proposed Bill may give rise to structuring transactions reminiscent of the old days of sales tax. Wineries may be able to obtain higher rebates by interposing an entity between themselves and exporters.
- The Bill introduces penalties for wine merchants if they fail to advise a winery of their intention to sell the wine GST-free. This is likely to cause difficulties for merchants who, at the time of purchase, are not certain how they will sell wine.
- The Bill contains some draconian company grouping provisions, based on a 40% control test. These grouping provisions ensure that a group with multiple entities can only access a single $290,000 rebate.
At present, the most important issue for the wine industry is retention of existing State rebates. Without these State rebates, very few wineries will receive the additional $290,000 benefit promoted in the Government’s 2004 Budget.
FBT curbs for frequent flyers
Employees face potential ATO curbs on accumulating frequent flyer points through their consumer loyalty programs.
The ATO has moved to broaden the scope in which frequent flyer points are subject to fringe benefits tax, including a new threshold figure for points subject to FBT.
The ATO has issued an addendum to a 1999 taxation ruling deali...
