Australian Taxation Office raises the bar: Alcohol remission claims under scrutiny

The Australian Taxation Office (ATO) is increasing scrutiny of alcohol manufacturers claiming remission of excise duties under the Excise remission scheme for manufacturers of alcoholic beverages (remission scheme). With the annual cap increasing to $400,000 from 1 July 2026, manufacturers should confirm their arrangements, calculations and records are consistent with the remission scheme’s intent and legal requirements and can withstand review.

A $400,000 opportunity for alcohol manufacturers

The remission scheme provides eligible Australian alcohol manufacturers with a full automatic remission of excise duty on alcoholic beverages they manufacture and enter for home consumption up to the remission cap.

As of 1 July 2026, the annual remission cap has increased from $350,000 to $400,000.

Eligible manufacturers apply the remission through their excise returns rather than paying excise duty and later claiming a refund. All goods entered for home consumption for the period must be reported on the excise return, and manufacturers must track claims to ensure the annual cap is not exceeded.

Broadly, to access the scheme, a manufacturer must:

• Hold an excise manufacturer licence for the relevant premises
• Manufacture and enter the alcoholic beverage for home consumption
• Ferment or distil at least 70 per cent of the beverage’s alcohol content
• Be legally and economically independent of other manufacturers claiming the remission.

Independence may be questioned where manufacturers share ownership, funding, premises, equipment, personnel or operational control. If entities are not independent, only one manufacturer may claim the remission.

Contract manufacturing arrangements also require careful consideration. The claimant must be the entity genuinely responsible for the manufacturing process, not merely the brand owner, marketer, blender or distributor.

Distillers must also satisfy the ‘still ownership’ test, generally from the financial year after their first two eligible financial years of claiming the remission. This requires ownership of a still with a capacity of at least five litres that is installed, ready for use and used to manufacture alcohol during the financial year.

The ATO scrutiny intensifies

The ATO has indicated an increased compliance focus on claims that may undermine the scheme’s integrity.

Its focus areas include:

• Businesses connected through shared premises, equipment or personnel
• Contract manufacturing arrangements
• Products made by diluting alcohol rather than genuine brewing or distillation
• Compliance with the ‘still ownership’ test.

From September 2026, the ATO will introduce targeted pre-licensing reviews and increased scrutiny of new licence holders with shared premises, personnel or expertise.

From October 2026, new participants can expect closer review during their first two years, including first-year claim reviews and checks on whether an operational still has been installed.

Businesses unable to substantiate their eligibility may face recovery of unpaid excise, penalties and continued ATO scrutiny. Manufacturers should identify and correct any errors before the ATO commences a review.

Is your remission claim accurate and defensible?

BDO can help confirm your eligibility, strengthen supporting documentation and identify potential compliance issues before they lead to repayment, penalty or audit exposure. We can review:

• Legal and economic independence
• Contract manufacturing arrangements
• Still ownership and use
• Remission calculations and the annual cap
• Record-keeping practices to support and substantiate remission claims.

Contact our international trade team to discuss whether your remission claims are accurate, supportable and ready for ATO review.