The Wine Equalisation Tax
Currently, traders that make wine, import wine into Australia or sell it by wholesale typically have to pay a 29% tax on the wholesale value of the wine, with wine producers potentially entitled to a rebate. However, the broad definition of 'producer' has meant a measure initially implemented to support local and regional wine makers has instead been widely exploited by large industrial manufacturers and encouraged business structuring to claim multiple rebates at different stages of wine production.
In late 2016, after extensive consultation with the industry, the Turnbull Government announced a number of proposed amendments to the Wine Equalisation Tax rebate to close loopholes regarding who will qualify as a 'producer', following the initial announcement of incoming changes in the 2016 Budget.
Some of the planned changes relate to ownership and packaging; producers will need to own 85% of the grapes used and maintain ownership through the rest of the winemaking process, and there are new restrictions on the size of containers.
Importantly, in order to protect local producers and address concerns regarding bulk unbranded wine, it is proposed that the rebate be limited to wine that is branded with an Australian registered trade mark for domestic retail sale.
What does it mean?
Although there is no legislation currently before Parliament and the proposed measures are subject to change, wine producers should consider applying to register all of the trade marks under which they sell their wine in order to be ready if trade marks become part of the new eligibility criteria.
Whilst 2018 may seem distant, the registration of a trade mark is not a quick process. IP Australia will generally assess a trade mark three to four months after an application is filed, and the earliest date a trade mark can be registered is around seven and a half months from when the application is first filed. Further, it should be noted that if IP Australia raises any initial objections to the application, it is likely registration will take longer than seven and a half months. By filing trade mark applications now, producers should have enough time to ensure that any issues raised can be overcome and relevant trade marks registered well before any new eligibility criteria come into effect.
In a crowded industry which continues to attract global interest, it is essential to secure product names and labels when marketing your wine brands. Getting a head start on the trade mark registration process is an easy way to add important extra value to your business and brand portfolio, and may also move you one step closer to a potentially substantial tax rebate.
The HWL Ebsworth intellectual property team has considerable experience helping our clients protect their brands by registering trade marks in Australia and abroad. Trade mark registration remains the single most effective mechanism for a business to protect its name, logo and other brand assets.
This article was written by Luke Dale, Partner and Mary Szumylo, Solicitor.
For further information on our Intellectual Property and Trade Marks Group click here.
Important disclaimer: The material contained in this publication is of a general nature only and is based on the law as at 22 November 2016. It is not, nor is intended to be, legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice.