Craft beer tax axed in federal budget

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mr_wibble

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Ref: http://www.news.com.au/national/bre...t/news-story/688205b3634bebe0715e702cc7fde60d (WARNING: news.com.au link)

A bizarre beer tax that slugs craft brewers 40 per cent more for using smaller kegs will be axed in the federal budget.

A two-tier tax system means draught beer sold in 50 litre kegs are currently taxed at $34 a litre, but beers in kegs under 30 litres are slugged $49 a litre.

"This is unfair for smaller brewery businesses," Treasurer Scott Morrison told News Corp on Friday.

Alcohol manufacturers can currently claim a refund of 60 per cent in the excise duty paid on beer and spirits of up to $30,000 a year.

This will increase to $100,000 from July 1 next year, and apply to all brewers and distillers for the first time.

"This not only champions the craft brewers that we've all grown to love, it raises a very tantalising prospect for Australians: the likelihood of cheaper craft beer," Mr Morrison said.

"These brewers are predominantly small businesses and could benefit both from the increase to the excise refund cap and extended access to the concessional draught beer excise rate."

Opposition frontbencher Penny Wong said it was a grand idea, which the coalition pinched from her Labor colleague Anthony Albanese.

"I think it's a good idea, and it's Albo's idea," Senator Wong told the Nine Network.

What this is referring to is an proposed excise law change .

Basically if beer is packaged in containers >= 48 litres there is a significantly lower tax rate. Small breweries argue, that since big breweries distribute most of their product in 50l kegs, the larger proportion of their tax is smaller. Thus the small breweries get the poo-end of the stick on excise.

Note: the article is wrong, the tax changes at 48 litres, not 30 litres.
Ref: https://www.ato.gov.au/Business/Exc...oods/Alcohol-excise/Excise-rates-for-alcohol/

The upshot is, that if your beer is packaged in bottles, growlers, or even 20 litre kegs, you pay much more tax.

Breweries that produce less than 100,000 litres/year (number from out of my memory, may be incorrect) can claim a tax rebate up to $30k. So the proposed change seems to triple that amount.
 
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Leyther

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Lets just hope they pass the saving on to the consumer, some of the prices these days are ridiculous.

Not Kegged but Dainton recently released a Barley Wine and a Stout and the can prices at my local where a ridiculous $20 and $17, even the owner said he could not believe the prices.
 

mr_wibble

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Based on the article a 50L keg has $1700 tax?

No, but it's complicated...

For starters (for beer) there's different tiers of tax based on the AbV, < 1.15%, <3.5% > 3.5%
< 1.15% there's no Tax.
(for >1.15 but <3.5 I don't remember)
For > 3.5% the tax currently is $49.50 per LAL in a bottle, and $34.87 in a keg.
(where "bottle" is any container < 48 litres, and "keg" anything > 48)

A LAL is a litre of alcohol. So you work out how much alcohol is in the beer, subtract the "free" 1.15% AbV worth, then multiply it by the LAL cost depending on the sale vessel size.

So for 100 litres of 5% AbV beer
The LAL is 100 * (5% - 1.15%) => 3.85 LALs

So the excise on 50 litres of 5% AbV beer:
In a (>= 48 litre) keg, it's $67.12
In bottles (or 20L kegs), it's $95.29

The new legislation should remove this vessel-size condition.

But no-one seems to be talking about what the new excise amount would be.
Are they just going to scrap the "<48 litre" excise rule?!! Or is there a new figure altogether?

cheers,
-kt
 
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koshari

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The new legislation should remove this vessel-size condition.

But no-one seems to be talking about what the new excise amount would be.
Are they just going to scrap the "<48 litre" excise rule?!! Or is there a new figure altogether?

cheers,
-kt
8L now,
Tuesday's budget will include a change to those rules, so that all beer kegs larger than eight litres will be taxed the same way.
http://www.abc.net.au/news/2018-05-04/budget-cheap-craft-beer-treasurer-scott-morrison/9725998
 

MontPel

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No, but it's complicated...

For starters (for beer) there's different tiers of tax based on the AbV, < 1.15%, <3.5% > 3.5%
< 1.15% there's no Tax.
(for >1.15 but <3.5 I don't remember)
For > 3.5% the tax currently is $49.50 per LAL in a bottle, and $34.87 in a keg.
(where "bottle" is any container < 48 litres, and "keg" anything > 48)

A LAL is a litre of alcohol. So you work out how much alcohol is in the beer, subtract the "free" 1.15% AbV worth, then multiply it by the LAL cost depending on the sale vessel size.

So for 100 litres of 5% AbV beer
The LAL is 100 * (5% - 1.15%) => 3.85 LALs

So the excise on 50 litres of 5% AbV beer:
In a (>= 48 litre) keg, it's $67.12
In bottles (or 20L kegs), it's $95.29

The new legislation should remove this vessel-size condition.

But no-one seems to be talking about what the new excise amount would be.
Are they just going to scrap the "<48 litre" excise rule?!! Or is there a new figure altogether?

cheers,
-kt

So assuming the tax rate drops to $34.87/LAL, and if my math is right, we are looking at a saving of 57cents on a 450mL glass at 5%abv at the pub
 

koshari

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So assuming the tax rate drops to $34.87/LAL, and if my math is right, we are looking at a saving of 57cents on a 450mL glass at 5%abv at the pub
assuming that the beer your drinking has been supplied in a keg less than 48L, otherwise it will be the same. i think the main issue is it gives vendors an opportunity to provide more choice for a given area without being penalised, cafes with smaller volumetric output for one should benefit from being able to provide more lines..

Yob would have a better idea how this would play out,
 
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mkj

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Will this cause trouble filling growlers since now the keg will be lower excise than bottled beer?
 

koshari

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Will this cause trouble filling growlers since now the keg will be lower excise than bottled beer?
Firstly kegs have always been a lower excise. Just over 48l though. Secondly there is already provision for decanting to smaller vezsels. The excise rules state the licensee must make up the difference in excise.
 

wynnum1

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Would think that the tax would be like the gst and if they dropped the tax that the craft brewer would be required to drop the price of the beer not keep the tax as extra profit so how does that benefit craft brewers and what quantity of beer is sold directly to the consumer by the craft brewery will be like coca cola at the super market where they sell at half price every week of the year as a special.
 

MHB

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If you want to know way too much go here > ATO 10 Beer
Where I see it being a big help is with the new one direction polly kegs, most of which are 20-30L.
A small brewer can send a keg anywhere without having to worry about trying to get the keg back (kegs cost more than you make out of one that doesn't come back), without being slugged a bunch of extra tax. Should make craft beer much more available at venues a long way from the breweries.
Remember to that most of the beer being made in Europe is packed in smaller than 48L kegs, so its been way too expensive here, not just the freight but the extra-high excise. Will be interesting to see if the new rules will be applied to imported as well as local beer.
Mark

Tried tp put up a copy of the current excise rate tables, the ATO website id down for maintenance so will get it later or there is a link from the above ( that's down for maintenance...) under the heading
Commercial beer packaged in containers more than 48 litres capacity
M
 

wynnum1

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One direction polly kegs would go against waste laws that do not seem to be enforced by state governments plus they would have a cost that may work out more expensive then stainless.
 

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With any luck these changes will reduce the price of bottled craft beer. If the exise becomes the same from >48L and <48L, it should. Alcohol excise increase per CPI twice yearly, so will still have biannual increase.

Look forward to seeing a case of craft beer coming down to less than $80...
 

mr_wibble

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I don't think it will reduce the cost of bottled beer at all, since the excise is not changing on vessels of that size. Maybe we'll see a rise in 8 litre stubbies ;)

What will be good is that small venues will be able to buy 20 litre kegs at the same price as bigger ones (with respect to excise anyway). This should allow them to take a risk on a smaller volume of beer, and/or rotate their kegs sooner, allowing fresher beer.
 

GalBrew

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Lets just hope they pass the saving on to the consumer, some of the prices these days are ridiculous.

Not Kegged but Dainton recently released a Barley Wine and a Stout and the can prices at my local where a ridiculous $20 and $17, even the owner said he could not believe the prices.

I can’t see that happening at all.
 

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I don't think it will reduce the cost of bottled beer at all, since the excise is not changing on vessels of that size. Maybe we'll see a rise in 8 litre stubbies ;)

What will be good is that small venues will be able to buy 20 litre kegs at the same price as bigger ones (with respect to excise anyway). This should allow them to take a risk on a smaller volume of beer, and/or rotate their kegs sooner, allowing fresher beer.


Not true. The excise is broken into above 48 and below 48

1.1

Alcohol volume not exceeding 3%, individual container up to and including 48 litres (from ATO website).

There is no separate item for bottles.

So if they reduce the below 48, then it also impacts beer bottles. That's why beer bottles are taxed more than large kegs. They are in fact taxed at the same rate as smaller (<48L) kegs.
 

mr_wibble

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Not true. The excise is broken into above 48 and below 48

1.1

Alcohol volume not exceeding 3%, individual container up to and including 48 litres (from ATO website).

There is no separate item for bottles.

So if they reduce the below 48, then it also impacts beer bottles. That's why beer bottles are taxed more than large kegs. They are in fact taxed at the same rate as smaller (<48L) kegs.

Yes, but that's the change.
The current excise for any given AbV-% bracket is different about that 48 litre mark.
The mark is set to change from 48 -> 8 litres.

So my point is, most "bottles" (mini-kegs etc.) will still be below 8 litres, and thus have no change in excise.

Whereas currently small kegs, firkins, etc. (20, 30 litres) that are less than 48 litres are taxed the same as "bottle" sizes. If/when this law passes, they will move into the lower-excise bracket.

I could imagine the single use mini-kegs going from 5 litres to 8 litres to jump tax brackets.
 

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