Uncommercial contract manufacture arrangements to claim the wine equalisation tax (WET) producer rebate

A winemaker either purchased, or would purchase, grapes (or fruit or vegetables) from one or more growers to make wine. Such growers would not be eligible for the producer rebate. However, the winemaker may be eligible to the producer rebate subject to a maximum of $500,000 per annum. 2. The winemaker enters into contracts with the grower/s to make wine from their produce on their behalf, on the basis that the grower/s retain ownership of that produce and resulting wine. 3. At or around the time of entering into the contract with the grower/s, the winemaker commits to buy the resulting wine (possibly at a predetermined price). This removes the majority of commercial risk to the grower/s from the winemaking process, such as that which may arise from the quality of the wine produced. 4. Once the wine is made by the winemaker, the winemaker pays the purchase price and the title of the wine is transferred to them. 5. The winemaker then sells the wine to a buyer in a transaction that is or would be liable to WET (i.e. if the purchaser had not quoted their ABN). 6. Each such grower claims a wine producer rebate of up to $500,000 per annum each for the wine that they have 'sold' to the winemaker. The sum of the rebates claimed by the grower/s and the winemaker is likely to exceed the maximum that the winemaker would be entitled to claim from the production of wine in that year. 7. The basic features of this arrangement can be summarised diagrammatically as follows: