Craft brewers and distillers can look forward to greater relief on excise duty from July 1. The federal government has announced a support package for the sector that is intended to aid in reinvestment and see the small company tax rate quickly reduced to 25%. This is part of a spate of relief packages the Morrison government has announced in the run up to the coming week’s federal budget.
Currently, small distillers and brewers can claim up to about 60% of paid excise duty, up to a maximum of $100,000 per year. When the new changes kick in, they will be able to claim up to $350,000 annually. According to the Treasury, this should see the businesses recover as much as $55,000 on average. The changes are also expected to allow liquor producers to triple the amount of product they can sell even before excise applies.
According to Treasury’s Josh Frydenberg, these changes are expected to boost reinvestment by the businesses by allowing them to hire more people and invest in new equipment and machinery. The industry currently employs about 15,000 people and is made up of about 600 craft brewers and 400 distillers. Two-thirds of these businesses are based in regional and rural areas.
Frydenberg was however unable to confirm whether this move would lead to a reduction in alcohol prices. He did however state that some industry players had suggested it was an opportunity to lower keg prices by a couple of dollars. The relief will put benefits for distillers and brewers at par with the Wine Equalisation Tax (WET) Producer Rebate.
One brewer that is happy with the news is Top Shelf International’s co-founder and managing director, Drew Fairchild. He believes that this boosted relief will make a difference to businesses, particularly in exporting Australian products internationally. He highlighted the success of the wine industry in building an export market and hoped that with such tax reform, small brewer and distillers could replicate the results.
Canberra gin producer, Big River Distilling Co, is also looking forward to the changes. Its founder, Clyde Morton, says the measures will aid in allowing the business to expand its distribution to other jurisdictions, nationally and abroad. He confirmed that the relief would allow his company to offer more hours to current employees and add new positions.
Morton however recognises that the continued growth of his business has been due to local support. He said locals made a deliberate choice to buy Australian products during the lockdown, providing much-needed support to businesses that would have been adversely affected by the pandemic. He felt though it was too early to tell, the fall in excise taxes did have the potential of a trickle-down effect that would result in the lowering of prices on gin and vodka for customers.