Alcohol tax relief in the 2025 Federal Budget
Alcohol tax relief in the 2025 Federal Budget
In the pre-election Federal Budget, the Albanese government confirmed its proposed temporary freezing of excise indexation on draft beer which is due to take effect after the next Federal election. In welcome relief to brewers, distillers and winemakers, the limits on the alcohol manufacturer’s remission (AMR) and the wine equalisation tax (WET) producer rebate are to be increased by $50,000 per annum. These changes aim to provide financial relief to the alcohol industry, supporting growth and job creation amidst rising production costs and economic challenges.
Increase in the excise and wine equalisation tax thresholds for brewers, distillers and wine makers
The AMR and WET producer rebate currently provide a $350,000 per year concession to qualifying Australian brewers, distillers and wine producers - meaning those brewers, distillers and wine makers were not liable for the first $350,000 in excise or WET for the beverages they produced. The Treasurer’s announcement that these concessions would be increased to $400,000 from 1 July 2026 is welcome relief to the industry.
For brewers and distillers this is especially welcome news as the $350,000 AMR has not changed since it was introduced in July 2021, despite increased production costs and the steady increases in excise rates, which eroded the volume of alcohol that could be sold to the Australian market excise-free (a kind of ‘bracket creep’).
Whilst this change will result in an estimated tax receipt decrease of $70 million over the next five years, it is a valuable investment in the industry to support growth and job creation.
It is important to note that the requirements for ‘legal and economic independence’ from other businesses claiming the AMR and WET producer rebate remain unchanged and is an area of compliance enforcement for the Australian Taxation Office.
Temporary freeze on draught beer excise increases
Alcohol excise and excise-equivalent (imported) duty rates are automatically indexed via a legislative formula to inflation each February and August.
As a cost-of-living measure, and to assist the hospitality industry, the Treasurer confirmed an earlier announcement of a temporary freeze on this automatic indexation of excise and excise-equivalent duties for draught beer (beer on tap) for two years.
That is the August 2025, February 2026, August 2026 and February 2027 indexation will not occur. The usual indexation of duty for draught beer will recommence from August 2027.
Non-draught beer (canned/bottled) beer will not receive the benefit of the excise increase freeze, nor will spirits or pre-mixed beverages. These goods remain highly taxed currently at $61.57 and $104.31 per litre of alcohol respectively and rising every six months. This represents a significant portion of the price Australian consumers now pay for alcohol.
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