Australia has one of the most complex and most expensive alcohol taxation systems in the world. If you brew beer, distil spirits, manufacture RTDs, or produce wine, you are dealing with at least one (and often several) layers of tax that most accountants never touch.
This guide covers everything you need to know in plain language. If you want us to handle all of this for you, book a free strategy call.
1 What is alcohol excise tax?
Excise is a tax on goods manufactured or produced in Australia. For alcohol, it is governed by two pieces of legislation: the Excise Act 1901 (administration, licensing, enforcement) and the Excise Tariff Act 1921 (rates).
If you manufacture beer, spirits, or certain other alcoholic beverages in Australia, you owe excise duty to the ATO. The duty is technically imposed at the moment of manufacture, but it does not become payable until the goods are “delivered into home consumption”, meaning released from your licensed premises into the domestic market.
Until that point, your stock sits “underbond” under ATO control. Excise generates roughly $7.5 billion per year for the Federal Government from approximately 3,500 licensed clients.
2 Who has to pay it?
Three categories of alcohol attract excise duty:
- Beer: Brewed beverages from yeast fermentation of cereals, containing hops or bitters with at least 4 IBUs.
- Spirits: Products of distillation. Brandy, whisky, rum, vodka, gin, and any other distilled beverage.
- Other excisable beverages (OEBs): RTDs, pre-mixed drinks, hard seltzers, flavoured alcoholic beverages, liqueurs, and fermented products that do not meet the definition of beer or wine.
Wine producers do not pay excise. Wine falls under the Wine Equalisation Tax instead. Completely different regime, different legislation, different calculation method.
3 Excise vs Wine Equalisation Tax: the difference
| Excise | WET | |
|---|---|---|
| Applies to | Beer, spirits, OEBs | Wine, cider, perry, mead, sake |
| Calculation | Per litre of alcohol (LAL) | 29% of wholesale value |
| Indexed to CPI | Yes (Feb and Aug) | No (fixed at 29% since 2000) |
| Reported via | Excise returns (separate from BAS) | BAS labels 1C and 1D |
| Requires a licence | Yes | No (uses GST registration) |
| Concession | AMR ($350k, rising to $400k) | WET rebate ($350k, rising to $400k) |
| Legislation | Excise Act 1901 / Tariff Act 1921 | A New Tax System (WET) Act 1999 |
4 How excise duty is calculated
Excise is expressed as a dollar rate per litre of alcohol (LAL), not per litre of product.
Beer
Beer gets a threshold deduction. Duty only applies to alcohol content above 1.15% ABV:
Excise duty = Volume (litres) x (ABV – 1.15%) x Rate per LAL
Example: 1,000 litres of 5% ABV packaged beer: 1,000 x (5.0% – 1.15%) x $63.75 = $2,454.38
Spirits and OEBs
No threshold deduction. Duty applies to the full alcohol content:
Excise duty = Volume (litres) x ABV x Rate per LAL
Example: 100 litres of 40% ABV gin: 100 x 40% x $107.99 = $4,319.60
A standard 700mL bottle of 40% spirits carries approximately $30.24 in excise duty alone. Australia has the third-highest spirits excise rate in the world.
5 Current excise duty rates (from 2 February 2026)
Beer
| Tariff | Description | $/LAL |
|---|---|---|
| 1.1 | Packaged, ≤3% ABV | $54.74 |
| 1.2 | Draught, ≤3% ABV (frozen) | $10.57 |
| 1.5 | Packaged, >3%-3.5% ABV | $63.75 |
| 1.6 | Draught, >3%-3.5% ABV (frozen) | $33.11 |
| 1.10 | Packaged, >3.5% ABV | $63.75 |
| 1.11 | Draught, >3.5% ABV (frozen) | $43.39 |
| 1.14/1.15 | BOPS ≤3% / >3% ABV | $3.84 / $4.43 |
Spirits and other excisable beverages
| Tariff | Description | $/LAL |
|---|---|---|
| 2.1 | Brandy | $100.85 |
| 2.3 | Other spirits (gin, vodka, whisky, rum, etc.) | $107.99 |
| 2.5 | Spirit for fortifying Australian wine | Free |
| 2.6 | OEBs ≤10% ABV (RTDs, hard seltzers) | $107.99 |
| 2.7 | OEBs >10% ABV | $107.99 |
| 2.8-2.10 | Denatured / industrial / scientific spirits | Free |
The next indexation occurs 1 August 2026 (except draught beer, which remains frozen). We update this page within 48 hours of each rate change.
6 Excise licensing
You must hold a manufacturer licence before you start production. Manufacturing without a licence is a criminal offence with penalties up to two years imprisonment.
There is no application fee (licence renewal fees were abolished from 1 July 2024). A manufacturer licence covers brewing, distilling, manufacturing OEBs, blending, maturing, and storage. A storage licence covers warehousing underbond goods at separate premises. An entity-level licence (new from July 2024) consolidates multiple premises under a single licence.
Winemakers do not need an excise licence. Wine is taxed under WET and reported on the BAS.
7 How to lodge and pay excise
Excise is reported through excise returns, completely separate from your BAS. Under the standard prepayment method, you lodge and pay before goods leave your premises. Most established producers apply for a Periodic Settlement Permission (PSP):
| Settlement period | Due date | Who qualifies |
|---|---|---|
| Weekly | First business day after the week | Standard businesses |
| Monthly | 21st of the following month | Small business entities |
| Quarterly | 28th day after the quarter | SBEs under $50M turnover |
You must lodge nil returns even when no deliveries occur in a period.
8 The Alcohol Manufacturers’ Remission
The AMR provides a full 100% remission of excise duty up to $350,000 per financial year (rising to $400,000 from 1 July 2026). At the spirits rate of $107.99/LAL, the $350,000 cap covers approximately 3,241 LAL, equivalent to about 11,575 standard 700mL bottles of 40% spirits.
Eligibility: You must hold a manufacturer licence, have fermented or distilled at least 70% of the alcohol content yourself, own an operable still (for distillers), and be legally and economically independent of any other entity claiming the AMR or WET rebate.
Contract manufacturers who only blend pre-made base spirits with non-alcoholic ingredients do not qualify. The ATO has dedicated resources monitoring entities attempting to access multiple remissions through related structures (Excise Ruling ER 2023/1).
9 The draught beer excise freeze
From 4 August 2025, excise rates on draught beer are frozen for two years. The four CPI indexation events through to February 2027 will not apply to draught rates (tariff subitems 1.2, 1.6, and 1.11). Packaged beer, spirits, and RTDs continue to index normally.
If you are a brewery with a significant keg-to-pack ratio, this freeze creates a growing price advantage for your draught product. Smart producers are factoring this into their channel strategy.
10 Wine Equalisation Tax explained
WET is a flat 29% of the wholesale value. It covers grape wine, sparkling wine, fruit and vegetable wines, cider, perry, mead, and sake. The 29% rate has not changed since 2000 and is not indexed to CPI.
Wholesale sales: WET = 29% of selling price (excluding WET and GST).
Retail and cellar door: Use the half retail price method: 50% of retail price (including WET and GST), then apply 29%. Effectively ~14.5% of retail.
Exports: WET-free. You can claim WET credits on wine purchased for export.
WET is reported on your BAS at labels 1C (payable) and 1D (refundable). No separate excise return is required.
11 The WET producer rebate
Wine producers can claim a rebate of up to $350,000 per financial year (rising to $400,000 from 1 July 2026). This effectively wipes out WET on approximately the first $1.2 million in wholesale sales.
Eligibility (post-2018 rules): You must be a genuine producer, own the source product constituting at least 85% of the wine’s total volume throughout winemaking, sell in branded containers of 5 litres or less, and apply your own registered trademark.
Important: The rebate is assessable income. It must be declared in your income tax return.
12 Excise vs customs duty on imports
Excise applies to alcohol manufactured in Australia. Imported alcohol pays customs duty administered by the ABF at excise-equivalent rates. Some imported spirits may also attract an additional 5% ad valorem customs duty on top.
If you import base spirits and use them to manufacture excisable products at your licensed premises, the customs duty liability can be extinguished and replaced by excise duty on the finished product, but only if you hold both an excise manufacturer licence and a customs warehouse licence at the same premises.
13 Record-keeping and stock control
As a licence holder, you must maintain accurate records of all receipts, production, movements, sales, on-premises consumption, tastings, giveaways, waste, and stocktake results. Records must be retained for five years.
Any stock discrepancies beyond normal expected losses must be reported to the ATO. Missing stock can result in the ATO demanding duty payment on the missing goods. The ATO retains the right to enter and inspect your licensed premises at any time without notice.
14 Moving underbond goods
You cannot move underbond alcohol between premises without ATO permission. Three types: single movement (one-off), continuing movement (ongoing between specified premises), and general movement (new with entity-level licences, allows movement to any licensed premises).
Moving underbond goods without permission is a criminal offence carrying up to two years imprisonment.
15 How GST interacts with excise and WET
GST applies on top of everything else. Your GST-inclusive selling price includes the excise or WET component, meaning the consumer is effectively paying GST on the tax.
Excise and GST are reported separately: excise through excise returns, GST through your BAS. WET and GST are both on the BAS but at different labels. Keep your chart of accounts clean enough to reconcile all three independently.
16 ATO audits and compliance risks
The ATO estimates a $745 million tax gap across alcohol excise and customs duty, roughly 9.1% of expected revenue.
Audit triggers: Incorrect tariff classification (especially OEBs vs beer after Draft ED 2024/D2), stock discrepancies, AMR independence concerns, WET rebate eligibility issues, and illicit production (88% of the tax gap). The ATO cross-references production volumes with raw material purchases, packaging purchases, and sales data.
17 Recent legislative changes
2024: Streamlining Administration Act
The biggest overhaul in decades (effective 1 July 2024): removed licence renewal fees, introduced entity-level licences, enabled general movement permissions, established a public register, and extended excise refund entitlements from 12 months to four years.
2025-26 Federal Budget
Draught beer excise freeze from August 2025 for two years. AMR and WET rebate caps increase from $350,000 to $400,000 from 1 July 2026. Combined revenue cost: $165 million over five years.
18 Common mistakes we see
- Using the wrong tariff rate. A hard seltzer classified as beer instead of an OEB. A cider that does not meet the “wine” definition. These compound over months and years.
- Not applying the 1.15% threshold correctly for beer. Some producers calculate duty on the full alcohol content. Others apply the threshold to spirits (which do not get it).
- Missing the AMR independence test. Setting up a related entity to access a second $350,000 without satisfying the independence requirements.
- Forgetting nil returns. You must lodge even when no deliveries occur. Missed nil returns affect your PSP status.
- Not declaring the WET rebate as income. The $350,000 rebate is assessable income.
- Poor stock records. The ATO can visit any time. If records do not reconcile, you have a problem.
- Moving underbond goods without permission. The penalties are criminal, not administrative.
19 Frequently asked questions
How often do alcohol excise rates change in Australia?
What is the difference between draught and packaged beer excise rates?
What is the Alcohol Manufacturers’ Remission?
Is excise payable on cider, mead, or hard seltzers?
How much beer can a small brewery sell before exceeding the AMR cap?
What records must a brewery or distillery keep?
What does “underbond” mean?
Can I legally distil spirits at home in Australia?
20 Getting specialist help
Alcohol excise operates under its own legislation, has its own lodgement system, its own licence requirements, and its own compliance teams at the ATO. If your accountant is Googling excise tariff subitems while you are trying to get product out the door, you are paying for their learning curve.
At National Accounts, we handle excise compliance, WET obligations, AMR and rebate claims, licensing support, business structuring, and ATO audit defence for breweries, distilleries, and wineries across Australia.