Excise: Credit for wine equalisation tax (WET) on wine exported.

How the credit for WET on "wine" as defined in Division 31 of the A New Tax System (Wine Equalisation Tax) Act 1999 (the WET Act), is calculated where the wine is to be exported as a GST-free supply and the amount of WET borne on that wine is not known.

A wine exporting business has purchased wine from a retailer who is registered for the GST and who has supplied a tax invoice for the sale. The invoice does not indicate the amount of WET borne on the wine. The wine is exported as a GST-free supply.

Where the amount of WET paid in relation to wine purchased from a retailer and exported as a GST-free supply is not known, the credit which can be claimed is calculated as follows: half the purchase price of the wine (including WET and GST) x 29%

Credit ground CR 11 of the Wine Tax Credit Table in section 17-5 of the WET Act provides a credit for WET borne on wine that is sold as a GST-free supply provided that the WET was excluded from the sale price of the wine. Subject to certain conditions being satisfied an export of wine is a GST-free supply.

Division 38 of the A New Tax System (Goods and Services Tax) Act 1999 sets out the supplies that are GST-free. Section 38-185 deals with the export of goods provides details of which exports are GST-free.

The scheme of the WET legislation is for WET to be collected on an " assessable dealing " with wine. The most common assessable dealing is a wholesale sale (ie sale to the retailer). The WET on a wholesale sale is calculated on the selling price of the wine. For most other assessable dealings WET is calculated on the " notional wholesale selling price " of the wine.

Section 9-25 of the WET Act sets out two methods for working out the " notional wholesale selling price " for a retail sale that is a taxable dealing. One of those methods is the " half retail price method ". Under this method the " notional wholesale selling price" is half of the retail price (including WET and GST) for which the wine was sold.

Half the retail price is also used as the basis for calculating WET borne on wine for the purposes of the Tourist Refund Scheme (section 25-5 of the WET Act and sub regulation 25-5.03 of the A New Tax System (Wine Equalisation Tax) Regulations 2000).

Accordingly, where the actual amount of WET is not stated on an invoice supplied in relation to a retail sale and cannot be obtained from the retailer, the ATO will accept a calculation of 29% of half the purchase price (including WET and GST) as a reasonable estimate of the WET borne on the wine. An amount calculated in accordance with this formula will then be the amount which may be claimed as a credit for the WET borne where the wine is exported as a GST-free supply, provided WET has been excluded from the price charged to the overseas purchaser