Last week the Federal Government announced $225m in tax relief to small breweries and distillers as part of the 2021-22 Federal Budget.

The excise refund cap for small brewers and distillers will be increased from $100,000 to $350,000 per year, with businesses able to receive a full refund of excise they pay up to the $350,000 cap from 1 July 2021. Previously, they were only able to receive a refund of up to 60% of excise paid.

The increase will also align the Excise Refund Scheme for brewers and distillers with the Wine Equalisation Tax (WET) Producer Rebate.

Streamlining these relief measures will couple with the previously enacted reduction in small business tax rates to drive greater profitability, or free up cash-flow to invest in innovation.

Keeping profits in-house

The package is expected to allow brewers and distillers to hold onto more of their profits, and potentially reinvest in their business, and may even be extended to consumers in the form of lower-cost offerings.

Importantly for brewers and distillers, it will likely enable them to further expand their market offering in what is a continually growing sector. Where craft beer, gin, vodka etc is made in Australia, it enhances local skills and manufacturing capacity in an industry sector that has significant growth prospects, particularly with the Government’s renewed focus on smart food & beverage manufacturing under the Modern Manufacturing Initiative.

Ensuring consistency with the Australian Taxation Office

To access the increased thresholds available, the distillers and brewers do not need to nominate or undertake any additional registration but must ensure their accounting for excise, with supporting documentation, is consistent with Australian Taxation Office expectations.

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