The AAT has found that the Wine Equalisation Tax (WET) and the related GST liability of an Australian importer of New Zealand wine was to be recalculated on the basis that the Commissioner had adopted the wrong methodology in calculating the taxpayer’s WET liability in the circumstances.

In arriving at its decision, the AAT essentially found that the taxpayer’s approach paid no regard to the taxpayer’s actual retail selling price of the wine and that, in effect, it presumed a retail selling price equal to the bare cost price, which did not produce a “taxable value” complying with the relevant law.

Instead, the AAT found that the Commissioner’s approach was the appropriate approach to calculating value for WET purposes – which involved taking into account the actual sales of wine made by the taxpayer to its customers, together with reducing adjustments for amounts deposited in the account of a related third party “merchant facility” which it said bore no relationship to the taxpayer’s business and would, in any event, lead to an element of double-counting.

Accordingly, it then ruled that in relation to the proper method for calculating GST, that this should reflect the above findings in relation to the taxpayer’s WET liability.

As a result, the AAT ruled that the objection decisions must be set aside since the Commissioner’s initial view as to the taxpayer’s WET was wrong and that the matter be remitted to the Commissioner for recalculation of both the taxpayer’s WET and GST liability.

(Re NZWINEIMPORTS Pty Ltd and FCT [2016] AATA 824, AAT, File No: 2015/6358, Frost DP, 19 October 2016).

[LTN 203, 20/10/16]