Spirits Rising: Alcohol Excise Remission Cap Lifted. What the Expanded Alcohol Remission Scheme Means for Your Business

Alcohol excise duty is a tax levied by the Commonwealth Government on alcoholic beverages manufactured in Australia and entered into the domestic market for home consumption. It is one of the Australian Government's significant revenue streams, though, with the recent decline in alcohol consumption, the Government is forecasting a drop of $3.3 billion compared to previous estimates over the four years to 2027–28.

Since 1 July 2021, the Excise Remission Scheme for Manufacturers of Alcoholic Beverages (the Remission Scheme) has provided eligible small-scale alcohol manufacturers with a full, automatic 100% remission of excise duty. As of 1 July 2026, the annual remission cap has been increased from $350,000 to $400,000 per financial year, offering further support to qualifying producers.

Who is eligible?

To qualify for the Remission Scheme, a manufacturer must hold a manufacturer licence authorising the production of alcoholic beverages at its licensed premises, have manufactured and entered an alcoholic beverage into the Australian domestic market and have fermented or distilled at least 70% of the alcohol content by volume. Importantly, the manufacturer must also be legally and economically independent of any other entity that has received a remission or refund under the scheme in the same financial year. Distillers face additional requirements, including still ownership tests. The scheme excludes products subject to wine equalisation tax and ready-to-drink (RTD) mixed spirits whereby the manufacturer of such RTDs do not produce the spirit used in the RTD.

Industry criticism

Despite its benefits for legitimate small producers, the Remission Scheme has attracted significant criticism. Industry bodies, such as, the Spirits and Cocktails Australia and the Australian Distillers Association, have warned that the scheme is being exploited by rogue operators, with excise-free bulk spirits allegedly being repackaged and sold at very low prices, undermining competition for legitimate producers. When the scheme was introduced, it was forecasted to cost $225 million over four years, however, the actual cost reached approximately $640 million. The number of beneficiaries has also grown from an initial base of roughly 1,000 brewers and distillers to approximately 1,500 by early 2025. Industry bodies have called on the Government to introduce stronger integrity measures, suggesting that requiring both an ATO excise licence and a valid state producer licence could reduce improper claims significantly.

Key Takeaways

The increase to the remission cap represents a welcome boost for eligible small-scale alcohol producers, but the scheme's ongoing integrity concerns mean that manufacturers should ensure their arrangements are robust and compliant. With the ATO actively reviewing claims through data matching and intelligence-led compliance activity, it is more important than ever for producers to understand their eligibility, maintain proper documentation, and ensure they meet the legal and economic independence requirements.

If you are an alcohol producer or manufacturer seeking to understand your obligations under the Remission Scheme, or wish to assess whether your business qualifies for Remission Scheme, it is helpful to speak to a lawyer who can guide you through the eligibility criteria and compliance requirements. As a firm that prides itself on knowledge and experience in assisting businesses in the alcohol and beverage industry, Stanton & Stanton is happy to assist with these matters. Please connect with us to find out more.

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