The Australian Distillers Association has welcomed the official confirmation of a tax relief package for the nation’s craft brewers and distillers in the 2021-22 Federal Budget.

The government will more than triple the amount of liquor producers can sell before excise tax applies. From July 1, small brewers and distillers will be able to claim a full refund on any excise they pay up to $350,000 annually. They are currently able to claim 60% of paid excise, up to $100,000 annually.

Treasurer Josh Frydenberg said the measures would spark investment in the sector, which currently employs around 15,000 people.

The Australian Distillers Association said the decision marks an important first step in the campaign to unleash the potential of the Australian spirits industry and will deliver much needed assistance to more than 400 craft distillers around Australia, most of whom are based in rural and regional areas.

Australian Distillers Association president Stu Gregor said: “This announcement provides much needed tax relief for hundreds of craft distillers around the country that were severely impacted by COVID-19. It means craft distillers will have more capital available to help their businesses grow and to employ more locals.

“We have great ambitions to grow Australia’s world-class distilling industry and this is a great first step that will help the industry to grow.

“The announcement from the Treasurer means more jobs – especially in regional Australia and importantly jobs that people will love. Craft Distillers are passionate about the innovative and world class products they make.

“The Announcement by the Morrison Government means more jobs in manufacturing, more jobs in production and more jobs in the regions. The Australian Craft distilling industry supports jobs from the farm to the glass.”

The Australian Distillers Association was part of an alliance with Spirits and Cocktails Australia that called on the Government to provide Fair and Sustainable Tax Reform for Producers and Suppliers of Spirits in Australia that recognised that we pay the third highest spirits tax in the world.

The Association concluded: “This tax burden is not fair and acts as a handbrake to growth.”

Craft brewers celebrate tax relief

The Independent Brewers Association said the increased tax relief will help Australian independent brewers reinvest and continue to grow their burgeoning home-grown industry.

“The investment from the Morrison Government is helping to rebuild an Australian-owned beer industry that will turbo-charge growth and deliver skilled jobs in family owned, independent breweries around the country,” said Independent Brewers Association (IBA) Chairman and founder of Sydney-based Wayward Brewing Co Peter Philip.

Until now, about $0.42 in every dollar of independent brewer revenue has been remitted in some form of federal tax.

“Excise tax is the single largest component of the cost of making a litre of beer, and it’s one of the highest beer taxes in the world.

“With this change, small brewers will be able to invest more in people, equipment, and facilities to meet growing demand.” Philip said.

Australia’s 600+ independent beer brewers contribute a massive $1.93 billion in economic output to the economy.

They directly employ 7,000 people representing 51% of all employment in the Australian brewing industry. The industry indirectly supports more than 33,000 jobs in associated industries such as agriculture, logistics, manufacturing, and hospitality.

“This new incentive will accelerate the resurgence of an Australian-owned beer industry, while giving consumers more home-grown choices. Consumers want to support local businesses that keep profits in Australia, which is why Australian beer lovers should look for the IBA Independent Seal for confidence that the beer that they are buying is independently owned,” Philip added. “Australia’s independent brewers grew by 15% in 2020, despite the beer market declining by 1.7% overall last year.”

Drinks companies to retain tax breaks

The government has also extended temporary full expensing and loss carry-back rules, allowing most businesses to deduct the full cost of eligible capital assets until June 30, 2023.

Loss carry-back rules allow firms with domestic turnovers capped at $5 billion to write off COVID-19-induced losses against previous profits.

Treasury estimated the extended tax relief measures would help boost GDP and create as many as 60,000 jobs by the end of 2022-23.

Treasurer Frydenberg amended the full expensing rules in November, which allowed drinks companies including Lion and Coca-Cola Amatil into the scheme.

Changes to ease hospitality staffing squeeze

Measures aimed at easing the worker shortage in the hospitality sector were also announced in the Federal Budget and have been welcomed by the Australian Hotels Association (AHA). visa requirements will now permit student visa holders to work more than 40 hours a fortnight.

AHA national CEO Stephen Ferguson said: “The Government has listened to the hospitality and tourism sector’s concerns and acted – we congratulate the Prime Minister and Treasurer.

“What we need now is for the States and Territories to support the road to recovery by ensuring Australians have confidence to travel within our own country without fear of sudden border closures and lockdowns.”

Ferguson also welcomed the $10million in spending on regulatory technology solutions for modern award obligations.

“Anything which makes it easier for employees and employers alike to navigate the 126-page Hospitality Award is a welcome move. This measure will make it easier and cheaper to navigate complex awards, make it easier to hire and reduce unintended payment errors.”

Distillers call for urgent tax relief