October 7th 2024.
In Australia, there may be a change in the definition of taxable beer, which could result in higher prices for popular drinks like seltzers, ginger beers, and lagers. The Australian Tax Office is currently considering redefining what constitutes as "beer" which would lead to higher taxes for a wider range of brewed alcoholic beverages.
Australia has higher taxes on alcoholic beverages compared to brewed drinks, in an effort to promote the consumption of low-alcohol beer. However, with this proposed change by the ATO, drinks that fall outside of the traditional definition of beer may end up costing significantly more at bars and pubs.
When it comes to taxation, beer is treated differently than other alcoholic beverages. The first 1.15% of alcohol is exempt from excise, but the ATO's definition of beer is quite specific. According to their guidelines, a beverage can only be considered as beer if it is brewed and made from a yeast fermentation process using primarily malted or unmalted cereals. This definition also allows for other carbohydrates to be included.
In recent news, a draft ruling by the ATO clarified that for a beverage to be labeled as beer, it must follow the conventional understanding of the term. This includes a bitter taste, moderate to low alcohol content, and characteristics of a beer base in terms of smell, taste, and appearance. However, this ruling could have a significant impact on the craft beer industry in Australia.
Kylie Lethbridge, the CEO of the Independent Brewers Association, expressed her concerns about this decision, stating that it could be a major blow to small independent brewers in the country. She also pointed out that this change would not only affect seltzers but also other popular drinks like ginger beer and fruit-based beers.
Lethbridge also brought attention to the fact that this tax change would ultimately impact consumers as well. Going out for a couple of beers with friends at the local pub would become almost unaffordable, especially considering the current cost of living crisis. It seems that this decision by the ATO could have a ripple effect on both the brewing industry and consumers alike.
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