If your favourite drink at the pub or the bottle shop is a seltzer, ginger beer or craft beer, a new proposed draft excise determination may strain your wallet from a potential price increase driven by higher taxes.
The Australian Tax Office (ATO) is proposing a new definition of “beer” for tax purposes, which could lead to higher taxes—and potentially higher prices—on certain alcoholic beverages.
The ATO filed the proposed excise determination in September 2024. If it passes, it will take effect from 1 February 2025.
What’s Proposed?
Presently, beer is taxed differently than other alcoholic drinks, with a portion of its alcohol content being excise-free.
However, the ATO’s proposed changes will tighten the definition of beer, requiring it to be brewed from cereals, have a bitter taste, and meet specific alcohol content limits.
This means that drinks like hard seltzers, alcoholic ginger beers, and some craft beers may no longer qualify for the current beer tax rate.
The proposed new rules would subject drinks that do not fit the updated “beer” definition to higher taxes, similar to those imposed on spirits. This could result in a price increase for many favourite beverages.
What’s the Impact?
Under the revised rules, drinks like seltzers, which are brewed similarly to beer but contain fruit flavours or other non-traditional ingredients, would no longer benefit from the beer excise exemption.
Instead, these beverages will be taxed at a higher rate, which could make them more expensive to purchase.
What Can You Do?
It’s important for businesses that sell alcoholic beverages to be aware of and potentially start preparing for these changes. Knowing how the proposed excise rules will affect pricing will help them stay ahead of the curve and comply with the tax obligations.
If you have any concerns or need assistance understanding these proposed adjustments, the LT team are here to help you work through this potential transition. Contact LT Today