The ATO on Tues 8.10.2013, issued Taxpayer Alert TA 2013/2 warning taxpayers against 2 contrived arrangements that are designed to create additional Wine Equalisation Tax (WET) rebates through non-commercial dealings between entities.
Broadly, the ATO said the first arrangement involves a wine producer arranging for another entity to be the producer of some of its wine, however, the other entity has no real role in the manufacturing process and sells the wine produced back to the wine producer. It said the wine is then sold to third parties, and both entities claim rebates even though the wine is only manufactured by one producer.
In the second arrangement, the ATO said the wine producer sells wine to other entities for blending or further manufacture. It said the wine producer organises and controls all the blending or further manufacture and the wine is sold between the entities. Similar to the first arrangement, the rebate on the sale of the wine is claimed by both entities according to the ATO.
The ATO said it is conducting compliance on the types of arrangements outlined above and considers that the arrangements may not be effective in creating additional rebate entitlements for the entities involved. In addition, it said the arrangements may be a sham and anti-avoidance provisions in Div 165 of the GST Act may apply.
[LTN 194, 8/10/13]