The ATO has now issued Taxpayer Alert TA 2021/1, in a warning to retailers such as bottle shops, bars and restaurants over the deliberate or reckless purchase of alcohol where duty has not been paid or otherwise properly acquitted by the manufacturer or distributor.
“A feature common to all of these arrangements is that the alcohol can be sold in retail outlets at a much greater profit and/or for a lower price than the same or similar products on which excise duty has been properly paid. This creates an unfair competitive advantage,” said the ATO.
“This complicit or reckless behaviour undermines the integrity of the excise regime, deprives the community of funds required to fund essential community services, and creates an uneven playing field for businesses that comply with the law.”
As part of its plans to ramp up compliance, the ATO is set to begin contacting retailers about their obligations, with potential audits on retailers that are showing signs of falling afoul of the law.
Alcohol may be classified illicit if it’s manufactured by an unlicensed company, if it’s been intentionally misclassified, or if it’s been reportedly sent for destruction and then diverted back into the domestic market.
Other common red flags include arrangements of “bonus stock” from manufacturers who give the retailer an invoice for the sale for a price that seemingly includes excise duty, but the quantity of alcohol on the invoice is significantly lower than what was actually supplied.
Likewise, alcohol stock manufactured without a licence and labelled to give an appearance of a legitimate product; missing, vague, or incorrect product descriptions on invoices; and commercially unrealistic prices are some indicators of illicit alcohol supply.
Retailers who suspect they’ve purchased illicit alcohol have been advised to contact the ATO to rectify the problem as soon as they can.
Under the Excise Act, a retailer that sells or offers the sale of alcohol which hasn’t had duty paid on it could be exposed to penalties worth up to five times the amount of excise duty that would have been payable on the goods originally.
The ATO has also warned that tax agents involved or facilitating arrangements that enable the sale and distribution of illicit alcohol would likely be referred to the Tax Practitioners Board for consideration of whether they’re in breach of the Tax Agent Services Act.
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.