If you are an Australian resident who aspires to distil their own alcohol, it is essential to be aware of the fact that you are required to pay tax on the alcohol you produce. Australians are required to obtain a licence to distil alcohol which is available to obtain for free from the Australian Tax Office.
The licence that is necessary to obtain to produce spirits in Australia is called a ‘excise manufacturing licence. It is required if you are wanting to do any of the following things which include; buying or selling a still, importing a still, having possession and custody or control of a still and to move or set up a still in your home or at a commercial premise.
Unlike spirits, the production of beer, cider or wine for personal use doesn’t require a licence and therefore it is not illegal. Distilled spirits include; rum, gin, whiskey and brandy.
If an Australian is caught using a still to make spirits without proving that they have an ‘excise manufacturing licence’ they can face up to a fine of $85,000 or even potentially spend up to two years in prison. These penalties will be imposed on the offended regardless of whether they are producing alcohol for sale or only for ‘personal use’.
Australians are required to pay tax on the spirits that create. Despite this, Australians are not required to pay tax on the beer or cider they produce. This law came into effect in 1901 and hasn’t been changed by the Australian Government since its introduction.
The amount of tax that is required to be paid is determined by each bottle you buy and is the same amount as the tax you pay on the spirits you make at home. The excise rate increases every 6 months and as of 1st February 2021 currently sits at $87.68.
When you apply for a ‘excise manufacturing licence’, the Australian Tax Office encourages Australians to take into consideration key factors regarding their house of residence. This includes considering the security of your premise and furthermore whether the right amount of excise duty will be paid when it is required to be paid. ‘Excise duty’ is payable on alcohol distilled even if it is not sold. There are also refunds available for duty amounts paid that can be claimed if eligible.
After you have obtained an excise manufacturing licence, it will be deemed valid from the day it’s granted until the following 30th September after the second anniversary of the day it was obtained, unless you decide to cancel it earlier. Once the individuals original excise manufacturing licence has expired it can be renewed for another three years, expiring on 30th September of the year which it is set to expire.
The application for permission to own a still with a capacity of 5 litres or more can be obtained and completed via the ATO. An individual can be fined up to $8,500 if they fail to seek permission from the ATO to own the still. You don’t need permission from the ATO to buy a still that is under 5L.
From 1st July 2017, Australians can claim a refund of 60% of the excise duty they have paid on the spirits they have distilled. The maximum refund you are able to claim is $30,000 per financial year. The claim must be made within 12 months after paying the excise duty.
In December 2020, the Australian Government announced that, from 1st July 2021 eligible alcohol manufactures will be allowed to instantly receive a 60 percent remission of excise duty when they lodge their excise returners. This change means that manufactures will no longer be required to lodge separate refund forms. The current limit of $100,000 per financial year will continue to apply.