Tax Facts – Wine Equalisation Tax

Wine Equalisation Tax (WET) is a tax on wine levied at 29% of the taxable value of wine. The taxing point is the last wholesale sale, or a retail sale or application for own use (e.g. tastings) when there is no wholesale sale. The taxable value is the actual sale price (excluding WET and GST) for wholesale sales, or a notional equivalent value in the other situations.

WET affects wine manufacturers, wholesalers, and importers. Retailers do not have a WET liability unless they make their own wholesale wine. WET is paid as part of the entity’s activity statement, the tax period is the same as the entity’s tax period for GST (which may be monthly, quarterly or annually).

The Producer Rebate scheme entitles wine producers to a rebate of WET for up to $500,000 of domestic sales each financial year. There is a modified producer rebate scheme for New Zealand wine producers.
Generally, WET is included in the price that retailers such as bottle shops and restaurants pay when purchasing wine. The retailer is not entitled to claim back the cost of the WET, as the WET is built into the price the retailer pays and then passed on to the consumer.

WET applies to the following alcoholic beverages:

  • Grape wine (including sparkling and fortified wine, marsala, vermouth, wine cocktails, and creams)
  • Other fruit wines and vegetable wines (including fortified fruit and vegetable wines)
  • Cider and perry
  • Mead (including fortified mead) and sake
  • MORE: See the ATO web site for more information on Wine Equalisation Tax and for instructions on filling out the WET section of the Activity Statement.

    • Tax Facts – Tax Payer Penalties

    Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid these charges, ensure you pay the full amount of tax you owe by the due date.

    The main charges for failing to meet tax obligations are the:

    Additional penalties include failing to:

    • Keep or retain required records
    • Retain or produce required declarations
    • Provide access and reasonable facilities to an authorised tax officer
    • Apply for or cancel GST registration when required
    • Issue a required tax invoice or adjustment note
    • Register as a PAYG withholder when required
    • Lodge a required activity statement electronically
    • Pay a required amount electronically

    If a taxpayer is audited and an amended assessment is raised, further penalties of up to 75% of the additional tax levied may be applied, depending on the severity of the offence. Examples include making a false or misleading statement, not taking reasonable care, or taking a position that is not reasonably arguable in a tax return or other document.

    Tax Facts – Superannuation Guarantee

    In addition to employees’ salaries and wages, employers are required to pay superannuation contributions on behalf of all eligible employees. This compulsory contribution is called the superannuation guarantee. The definition of employee for this purpose includes certain contractors. The minimum contribution from 1 July 2014 is 9.5% of each eligible employee’s earnings base (usually their ordinary time earnings) and must be paid within 28 days after the end of each calendar quarter. Employers must also provide employees with a choice of superannuation fund.

    The minimum contribution rate will remain at 9.5% until 30 June 2021. After that date, the rate will increase by 0.5% each financial year until it reaches 12% from 1 July 2022.

    Employers are generally required to pay superannuation contributions for employees if they are:

    • Over the age of 18 (no upper age limit applies)
    • Paid $450 or more (before tax) in a calendar month.

    If an employer fails to make the minimum contributions for a quarter by the due date, the employer is liable for the Superannuation Guarantee Charge (SGC). The SGC comprises the unpaid contributions calculated on a higher earnings base, plus an interest charge (which is credited to the employee’s superannuation account) and an administration fee. The employer cannot claim an income tax deduction for the SGC.

    The Australian Taxation Office (ATO) provides the following tools to help you understand and meet your obligations:

    Tax Facts – Superannuation Contributions for High Income Earners

    Additional tax on super contributions at the rate of 15% is imposed on individuals whose combined income and contributions are greater than a certain threshold. From 1 July 2017 this threshold is $250,000. Prior to this it was $300,000. For affected individuals, this effectively increases the rate of tax on their superannuation contributions from 15% to 30%.

    The additional tax can be paid personally by the taxpayer or the taxpayer can apply to his/her superannuation fund to have the necessary amount released and paid to the ATO.

    Tax Facts – State Taxes

    Payroll tax

    Payroll tax is a state tax on the wages paid by employers when the total wages exemption threshold is exceeded. Exemption thresholds vary between states. The definition of wages generally includes employer superannuation contributions and fringe benefits, although the definition also varies between states.

    NOTE: Payroll tax is not the same as PAYG withholding tax collected by the Australian Taxation Office (ATO). PAYG is the tax deducted from an employee’s income and forwarded to the ATO.

    The following organisations are generally exempt from payroll tax, provided specific qualifying conditions are met:

    • Religious institutions
    • Public benevolent institutions
    • Public or non-profit hospitals
    • Non-profit non-government schools
    • Charitable organisations

    Land tax

    All landowners, except those in the Northern Territory, may be liable for land tax. In the Australian Capital Territory land tax is levied on lessees under a Crown lease, because land generally cannot be acquired under freehold title. Landowners are generally liable for land tax when the unimproved value of taxable land exceeds certain thresholds (excluding the ACT).

    In some states, deductions and rebates are available, depending on how the land is used. Principal places of residence are generally exempt from land tax, however this depends on particular qualifying criteria (these vary between jurisdictions).

    Land owned and used by the following types of organisations might be exempt from land tax:

    • Non-profit societies
    • Clubs and associations
    • Religious institutions
    • Public benevolent institutions
    • Charitable institutions

    Stamp duty

    Stamp duty is levied on particular written documents and transactions, including:

    • Motor vehicle registrations and transfers
    • Insurance policies
    • Leases
    • Mortgages
    • Hire purchase agreements
    • Property transfers (e.g. transfer of businesses, real estate, and particular shares)

    The stamp duty rate varies according to the type of transaction and its value. Depending on the nature of the transaction, certain concessions and exemptions may be available.

    State tax web sites

    Particular deductions and exemptions vary between states for all duties. For additional state-specific information, visit the applicable state web site:

    Tax Facts – Small Business Entity Concessions

    Small businesses with an annual turnover of less than $10 million may qualify for a range of tax concessions (although the threshold may be lower based on the concession). If your business is eligible you can use the concessions that suit you. You may have to satisfy additional conditions and will need to check whether you qualify for the concessions each tax year.

    Eligible businesses can use the concessions outlined in the table.

    CGT 15-year asset exemption* If you are 55 or older and retiring and your business has owned an asset for at least 15 years, you won’t pay capital gains tax when you sell the asset.
    CGT 50% active asset reduction* If you have owned an asset to conduct your business, you will only pay tax on 50% of the capital gain when you sell the asset. For individuals (including partners in partnerships and beneficiaries of trusts), this reduction applies in addition to the standard* 50% CGT discount, thereby reducing the taxable amount to 25% of the capital gain.

    * For foreign or temporary residents, a reduced CGT discount between 0-50% applies depending on individual circumstances.
    CGT retirement exemption* There is CGT exemption on the sale of a business asset (up to a lifetime limit of $500,000). If you are under 55, money from the sale of the asset must be paid into a complying superannuation fund, or retirement savings account.
    CGT rollover* If you sell a small business asset and buy a replacement, you can roll over your CGT liability to the value of the replacement asset. This means you won’t pay any CGT owing until you sell the replacement asset.
    Simpler depreciation rules You can usually pool your assets to make depreciation calculations easier.

    You can also immediately write-off – deduct the full cost in the year you buy them – most depreciating assets that cost less than a certain limit. The limits are:

    • Prior to 7.30 pm on 12 May 2015 $1,000
    • From 7.30 pm on 12 May 2015 to 28 January 2019 $20,000
    • From 29 January 2019 to 7.30 pm on 2 April 2019 $25,000
    • From 7.30 pm on 2 April 2019 to 30 June 2020 $30,000
    Simpler trading stock rules If the value of your trading stock has not increased or decreased by more than $5,000 over the year, you can choose whether or not to do an end-of-year stock take.
    Immediate deduction for certain prepaid business expenses You can claim an immediate deduction for prepaid business expenses if the payment covers a period of 12 months or less and ends in the following income year.
    Two-year amendment period The time limit for the Commissioner or the taxpayer to amend an income tax assessment of an individual or small business is two years, instead of the standard four years.
    Accounting for GST on a cash basis You don’t need to account for GST on a sale you make until you receive payment for the sale. Equally, input tax credits for purchases can only be claimed when you have paid for the purchase.
    Annual apportionment of GST input tax credits If you purchase items you use partly for private purposes, you can claim full GST credits for these on your activity statements. You can then make a single adjustment to account for the private use percentage at the end of the year.
    Paying GST by instalments You can pay GST by instalments the ATO calculates for you and can vary this amount each quarter if required.
    FBT car parking exemption In some cases you may be exempt from FBT for employee car parking.
    PAYG instalments based on GDP amount To save you working out your instalments based on actual income each quarter, all individuals and small business entities can pay fixed quarterly instalment amounts as calculated by the ATO based on their business and investment income in their most recently assessed tax return.
    Lower company tax rate Base rate entities pay company tax at 27.5% rather than 30%. The 27.5% rate will reduce to 25% by 2020-22.
    Small business income tax offset ** Individuals who receive business income other than via a company are entitled to a tax offset.

    * The annual turnover threshold for the CGT concession is $2 million.
    ** The annual turnover threshold for the small business income tax offset is $5 million

    MORE: For more information, see the Small business entity concessions essentials section of the ATO web site.

    Tax Facts – Reportable Tax Payments

    Some business in certain industries need to report to the ATO the payments made to contractors. The reporting is made in the taxable payments annual report and is due by 28 August each year.

    The industries covered include:

    • building and construction services
    • cleaning services for contractor payments from 1 July 2018
    • courier services for contractor payments from 1 July 2018
    • road freight services for contractor payments from 1 July 2019
    • information technology (IT) services for contractor payments from 1 July 2019
    • security, investigation or surveillance services for contractor payments from 1 July 2019

    Tax Facts – Rental Properties

    Top 10 tips to help rental property owners avoid common tax mistakes

    Whether you use a tax agent or choose to lodge your tax return yourself, avoiding these common mistakes will save you time and money.

    Click here to view the top 10 tips on the ATO website.

    Tax-smart tips for your investment property journey

    To obtain this publication

    This publication can be downloaded in Portable Document Format: download Tax-smart tips for your investment property journey (316KB).

    To order a printed copy, take note of the full title and select Online publications ordering service or phone the Publications Distribution Service on 1300 720 092 between 8.00am and 6.00pm, Monday to Friday.

    Tax Facts – Rates and Calculators

    The Australian Taxation Office (ATO) provides a variety of rate tables, tax calculators, and other tools on many topics, including the following:

    • Capital gains tax
    • Fringe benefits tax
    • Fuel tax credits
    • Goods and services tax
    • Income tax
    • PAYG withholding
    • Superannuation

    MORE: To access these tools, navigate to the Calculators & Tools section of the ATO web site.

    Tax Facts – PAYG Withholding

    Pay as you go (PAYG) withholding is a system for withholding amounts from payments to employees, other individuals and businesses. An entity will have withholding obligations if the entity:

    • Has employees, including company directors and officeholders
    • Has other workers such as contractors, and voluntarily agrees to withhold tax from payments to them
    • Makes payments to other businesses, if they don’t quote an Australian business number (ABN) to the entity
    • Makes certain other payments that are subject to withholding.

    If you are an employer or run a business and withhold amounts from payments, you need to:

    • Register for PAYG withholding
    • Register as an employer of working holiday makers (417 or 462 visa’s) if applicable.
    • Withhold amounts from wages and other payments
    • Lodge activity statements and pay the withheld amounts to the Australian Taxation Office (ATO)
    • Provide payment summaries to employees and other payees
    • Provide the ATO with an annual report once each income year has ended.

    Payment summaries and annual reports are not required in relation to amounts reported using single touch payroll.