The Australian Taxation Office (ATO) has confirmed it will crackdown on the exploitation of the $400,000 Alcohol Manufacturers Remission Scheme (AMRS). 

The intervention comes after repeated warnings from the Spirits Council of Australia that inadequate integrity measures in the AMRS were costing taxpayers millions of dollars and blurring the line between legal and illicit alcohol. 

Introduced in 2021, the scheme allows eligible domestic alcohol manufacturers to automatically claim a remission for the first $400,000 of excisable alcohol they manufacture each financial year, making those goods free of excise duty.

The ATO said it will ramp up compliance action against businesses suspected of rorting the scheme, including checks on new businesses seeking to enter the excise system and greater scrutiny of new businesses during their first two years of operation. 

Spirits Council of Australia Executive Director Steven Fanner said: “The Alcohol Manufacturers Remission Scheme plays an important role in helping Australia’s emerging distillers grow and invest in their businesses, but we need to ensure only genuine distillers are accessing this tax benefit.

“As an industry, we have been warning government that this scheme is not operating as it was intended to, and is being exploited by aggregators and people who are not genuine distillers. 

“Tough compliance action is critical but we should not stop at enforcement. We also need to look at the rules themselves to ensure the benefits of the Government’s support for distillers are not being diverted elsewhere.”

The ATO said businesses must be able to clearly demonstrate their eligibility and maintain robust records to support their claims. Those unable to substantiate their entitlement may face significant excise liabilities, penalties and ongoing compliance scrutiny.

Targeted compliance action already in place

Since July 2026, the ATO has expanded targeted compliance activities aimed at high-risk arrangements and behaviours that threaten the integrity of the scheme, including:

• whether a business truly operates independently from other alcohol manufacturers, particularly where businesses share premises, equipment or key personnel
• contract manufacturing arrangements, including confirming who is responsible for the manufacturing process
• whether products are being genuinely distilled or brewed, rather than created by simply diluting alcohol
• whether a business is meeting the “still ownership” test, and
• scrutinising bulk ethanol movement data and tip-offs provided by industry to identify businesses not manufacturing alcoholic beverages, not paying the correct excise duty or operating outside legal requirements.

Strengthening entry into the excise system commencing September 2026

Commencing September 2026, the ATO will introduce enhanced assurance activities for businesses seeking to enter the excise system, including:

• targeted pre-licensing reviews to verify manufacturing operations before new alcohol manufacturing licences are granted
• targeted reviews of newly approved licence holders where arrangements involve shared premises, common individuals or key personnel with specialised alcohol manufacturing expertise, such as distillers or brewers, and
• updated guidance for new excise participants, including refreshed information about scheme eligibility requirements.

Early intervention for new businesses commencing October 2026

Commencing October 2026, businesses new to the excise system can expect greater scrutiny from the ATO during their first two years of operation.

This will include the introduction of targeted first-year reviews of businesses making claims through the scheme to assess ongoing compliance with legal and economic independence requirements and identify eligibility concerns early.

The ATO will also target businesses making claims through the scheme that do not have an operational still installed after the first two years of claiming the concession.

ATO Deputy Commissioner Dr Rowan Fox (above) said: “The excise remission scheme for alcohol manufacturers was established to support genuine Australian alcohol manufacturers, not businesses that structure their affairs to gain concessions to which they are not entitled.

“Businesses or promoters that deliberately seek to rort the scheme undermine its integrity and disadvantage competitors who are complying with the law. It’s not about if you’ll get caught, it’s when.

“We’re focusing in on businesses entering the scheme that appear connected to existing manufacturers. Large liquor sellers cannot control a series of smaller businesses to game the remission scheme’s caps.

“Our objective is to identify potential risks before they become entrenched and ensure only eligible businesses gain access to these concessions from the outset.

“Protecting the integrity of the remission scheme is critical to maintaining a fair, sustainable and trusted excise system for the entire industry.”