ATO cracks down on alcohol remission scheme rorts

The Tax Office has announced that it is ramping up compliance action against them to “protect the integrity” of the scheme.

It said it will take quick action against any business it identifies as claiming concessions not entitled to, to recover unpaid excise and ensure the correct treatment is applied.

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

While the maximum amount of remission that can be claimed each financial year was capped to $350,000 from 1 July 2021 to 30 June 2026, the federal government increased the cap $50,000 from 1 July 2026.

Tightening entry into the excise system

Starting from September 2026, the ATO said it will introduce stricter assurance activities for businesses looking to enter the excise system.

These include:

• 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.
• Updated guidance for new excise participants, including refreshed information about scheme eligibility requirements.

The ATO will also undertake early intervention for and apply greater scrutiny to new businesses from October 2026 during their first two years of operation. Those making claims will undergo targeted first-year reviews to assess ongoing compliance with legal and economic independence requirements and pinpoint any eligibility concerns early.

In addition, it will target businesses making claims through the scheme that do not have an operational still installed after the first two years of claiming the concession.

Commenting on ATO’s crackdown on rorting, deputy commissioner Dr Rowan Fox 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.”

The latest measures are on top of the targeted compliance action already in place since July 2026 aimed at high-risk arrangements, 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.
• 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.

The remission scheme was designed for smaller businesses, and they must hold a manufacturer licence. They must also have manufactured an alcoholic beverage and entered it into the Australian domestic market, and have fermented or distilled at least 70 per cent of the alcohol content by volume of the alcoholic beverage.

The business must also be legally and economically independent of any other entity that received a remission under the scheme in the financial year. For those who are not eligible, only one manufacturer in the group is entitled to the remission or refund.

“We’re focusing on businesses entering the scheme that appear connected to existing manufacturers,” Fox said.

“Large liquor sellers cannot control a series of smaller businesses to game the remission scheme’s caps.”

Rowe said the ATO’s goal is to nip any rorting issue in the bud before any potential risks become entrenched, and ensure that only eligible businesses gain access to the scheme.

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