Every wine producer in Australia has to deal with the Wine Equalisation Tax (AKA ‘WET’).
If you make wine, import wine into Australia, or sell it by wholesale, you’ll usually have to factor in the Wet tax (unless subject to a special exemption).
Typically WET is 29% of the wholesale value of wine. Sometimes, such as in cellar room tastings, the tax applies to retail sales also.
For further information the full Australian Tax Office (ATO) details are available here.
WET Rebate Eligibility
In order to claim the WET Rebate a claimant must:
- own 85% of the grapes used throughout in the production process if a producer
- Package wine in a container with a branded trademark not exceeding five litres
Automatic Wet Accounting with Troly
Troly automatically calculates the WET value into Xero, allowing you to have an up-to-date WET liability and indirectly claim your WET credit if applicable.
Note: For the WET component to be calculated properly, each wine product needs to have the "Wine Tax Applicable" business attribute activated. All order already processed will not be changed by changing this business attribute.
WET and GST calculations
- Remember that GST is calculated by Xero, not Troly. This is why rounding errors crop up. Troly has to "uncalculate" the GST and pass the amount without GST to Xero which then adds the GST again.
- WET in Troly is calculated using the "Half Retail" method (see ATO). Here is an example:
- For a retail value of products including WET and GST (5,000) divided in half (2,500).
- WET Payable at 29% of that is $725
- Xero adds GST on top of everything and the WET calculated on a total including GST, we then remove the GST component before pushing to Xero
- The value calculated by Troly and pushed to Xero is slightly less and the discrepancy might come from the sale of a non-wine product, or shipping.
- Keep in mind cash and accrual accounting in Xero
- Note that we cannot recalculate taxes once an order has been paid.