Excise duties

How we feel excise changes

Excise is just another word for tax, and excise duty is imposed on a limited range of goods produced in Australia. This includes spirits and beer and the ready-to-drink 'alcopops' (but not wine, which has its own tax), as well as tobacco products and petroleum-based and alternative fuels.

Any business making, dealing with, manufacturing or even storing these 'excisable' goods needs a licence from the Tax Office, which is the controlling body for such products until they are 'delivered for home consumption'. In fact you'll need the taxman's permission just to move or store any of these items – this is known as the 'physical control' requirement of the law.

Click here for a list of all the activities which require a licence and the links to the relevant application forms.

The excise is usually paid by the manufacturer or distributor of the goods, not the retailer. The rates of excise can be increased each February and August in line with movements in the consumer price index (CPI), and the rates vary from item to item and are very specific in how they are applied and calculated.

How we feel excise changes
Excise is levied on a per litre basis for the amount of alcohol in drinks (the first 1.15% in beer is excise free – and see here for the wine equalisation tax), on a litre or kilogram basis for petroleum products and per 'stick' for cigarettes (or kilo for rollies). The excise system is administered by the Tax Office when it comes to locally made products, but imported goods that would be subject to excises if made in Australia attract customs duty, which is managed and collected by the Customs and Border Protection Service.

Excise licence holders need to lodge an excise return, which can be required as frequently as weekly, depending on the nature of the business. The return is used to record deliveries and movements of goods, and the payment of the correct duties on them.

Licence holders can claim refunds, or a waiver on duties, if the goods involved are somehow made unfit for human consumption or otherwise damaged before they reach the retail stage (although this is not generally available for fuel products).

The Tax Office also requires a business to keep records for five years. The records should show details of the quantities of goods manufactured and stored, sales, loss and wastage and movement of stock.

And the laws pertaining to excise duty contain some quirky anachronisms. There are instances when some excisable goods become excise-free when they are supplied to certain people (almost like somewhat dated 'privileges of office').

Did you know, for example, that the Governor-General can enjoy an excise-free tipple? As can state Governors? And the toddy of rum you could find in the hand of a Royal Australian Navy sailor probably got there free of duties as well. Diplomatic missions and consular posts are similarly favoured.