Small brewers and distillers to obtain $225 million in excise tax reduction

Small craft brewers and distillers are set to benefit from $225 million in tax relief from July, under new changes to excise tax that will be included in the upcoming federal budget.

Under a plan to “support jobs” in the sector, the excise refund cap for small brewers and distillers will be boosted from $100,000 to $350,000 per year, Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar said in a joint statement on Saturday.

Eligible brewers and distillers will also receive a 100% refund of any excise duty they pay, rather than the 60% refund that currently exists up to a cap of $100,000.

Drew Fairchild, co-founder and managing director of Top Shelf International, says he “welcomes” the government’s announcement, which will “undoubtedly” make a difference to businesses in the sector.

“The increase to $350,000 in excise relief undoubtedly makes a difference in supporting all businesses seeking to serve up great Australian products,” Fairchild tells SmartCompany.

Australia is home to about 600 brewers and 400 distillers, with two-thirds of those businesses operating in rural and regional areas.

The tax cuts are intended to help these brewers and distillers invest in and grow their businesses, which collectively employ about 15,000 Australians.

Fairchild, whose ASX-listed business produces whiskey, vodka and is soon to launch a tequila-like spirit, says the significant boost to tax refunds will help Australian distillers expand their exports internationally.

“We at Top Shelf look to the success of the wine industry in building export markets and have little doubt that with continued tax reform for spirits, Australia can build out an international export industry,” Fairchild says.

“We have the knowledge, the know-how and have demonstrated the capability, this is a welcome next step in allowing reinvestment to make this ambition a reality.”

In Australia, excise duty is a tax placed on alcohol, tobacco, fuel and petroleum products.

Excisable alcohol products, including beer, spirits and other excisable beverages are subject to excise duty if they are manufactured or produced in the country.

The Australian distilling industry has been lobbying the government for some time to reduce excise tax, which can be as high as 57% of the retail cost of a bottle of spirits.

It’s a cost that the businesses say said stunts the sector’s growth and stops spirits from becoming a successful Australian export product like wine.

Eligible small brewers and distillers will automatically receive the new excise duty refunds when they lodge excise returns from July 1.