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Tuesday, 04 March 2014 13:16

Update from the Chair - Damien Sheehan

While the waters continue to swirl around wine tax reform and the application of the WET rebate, the Australian Tax Office (ATO) is stepping up its campaign to rid the industry of tax rorting. In a widely reported announcement, the ATO called in the Australian Federal Police to investigate particular claims with a view to imposing criminal sanctions.

No doubt the involvement of the AFP is a dramatic action, but the campaign is more substantial than just that headline. Behind the scenes the ATO has begun consulting with industry, Wine Victoria included, to gain a better understanding of the compliance difficulties associated with calculating the producer rebate.

One of the key rorts which is being targeted occurs when the rebate is claimed for a series of sales between different entities that essentially adds nothing to the transaction as a whole, other than for the "middle man" to be able to each claim a rebate. (The recent change to the blending rules doesn't apply, because the "main" producer has already exhausted their rebate, so doesn't make a rebate claim.)

The ATO has released "tax advisories" setting out when such activity will be illegal, but is also looking to improve the reporting processes for the Earlier Producer Rebate. This is in line with recommendations made in 2010 by the Australian National Audit Office. It is worth noting that other recommendations included clarification of the definition of a wine producer, and the assessment of compliance risks associated with New Zealand wine producers claiming the rebate.

Bushfires and planned burns
Once again, we have had to deal with bushfires during the growing season and shortly we will be confronted with the planned burn program as we head into autumn. The Victorian node of the AWRI provides support to growers during this period with respect to advice regarding smoke taint and the planned burn program. This service exists for us as a result of an agreement struck between Wine Victoria, DEPI, GWRDC and the AWRI, and it is ably managed by Dr Mark Krstic.

With respect to planned burns I would like to draw your attention to two reports relating to the State Government's planned burn policy. The reports by the Bushfire Royal Commission Implementation Monitor (BRCIM) and the State of the Environment 2013 (SoE) both question the effectiveness of the annual rolling planned burn target of five percent.

Wine Victoria has been making the case for a scientific and risk based approach to the planned burn policy so it is heartening to see independent reports advocating a changed approach. The BRCIM report goes further and notes that the Government is already transitioning from a 'purely area based target approach' to a 'strategic risk based approach'. Let's hope we start to see some changes on the ground this autumn.

Lastly, I wish everyone all the best for vintage. It appears crops will be below average but with the heatwaves now hopefully out of the way we might enjoy some milder conditions for a quality harvest.