Wine Equalisation Tax Setup

Wine Equalisation Tax (WET) Setup

At the time of writing this topic, WET, short for Wine Equalisation Tax, applied to alcoholic beverages such as grape wine, sparkling wine, fortified wine, cider, sake, mead and various other alcoholic wines and wine products.

Key Features of WET

The WET tax rate is 29%
Wet is paid to the Australian Taxation Office (ATO) or The Australian Customs Service (Customs) by wine manufacturers, wine wholesalers and wine importers.
WET is normally included in the purchase price of wine when supplied to retailers such as bottleshops, hotels, restaurants and cafes. However, if a retailer on-sells (acts as a wine reseller) then WET also applies in this case.
WET does not apply to exports of wine.

WET is levied on wholesale transactions. The tax is calculated on the last wholesale price.

Example Calculation of WET

Wine Supplies	$100
WET (29%)	$29.00
WET Inclusive Price	$129.00
GST (10%)	$12.90
Total	$141.90

Government rules and regulations change on a periodic basis and the above data may be out of date by the time you consult this topic. Always check for the latest information by consulting the Australian Taxation Office directly or your accountant.

Implementing WET in CAPITAL

To calculate WET in CAPITAL carry out the following steps:

1. Start the INSTALLATION Workshop program.

2. From the main menu select Install|Taxes|Excise & Special

3. Under Excise Description type WET.

4. Under Tax Category either (a) assign an unused tax category or (b) leave blank.

If you assign a tax category to the above excise calculation then all stock items that incur WET should be assigned this tax rate. This can often be an efficient way to quickly assign stock items to the WET excise category, since you can assign a default tax category to a stock group. (This is useful if all your WET items are already assigned to a particular stock group or a collection of stock groups, or you can conveniently reorganise your WET related items into suitable product groupings.) In the case of WET, this approach is strongly recommended!

The tax category you select here should be set-up to calculate GST+WET, since GST is applied after WET is calculated. Do not assign a tax category that calculates 29% or 0% or anything other than GST+WET. How to set-up a GST+WET tax rate is explained in the section below, titled Applying GST to WET.

Alternately, you may use the Screen Builder to add an EXCISE1 field to your stock control screen and then tick the stock items that WET should be applied to. How to do this is explained in more detail in the next section, but this approach is not recommended for WET calculations.

Ticking each stock item to indicate whether WET applies or not is simple to do and does not require you to organise your stock items into any particular tax grouping. However, it can be time consuming if you have many WET applicable items in your stock system and it may be error prone if users enter new stock items and forget to tick the WET setting for that item. Also, it is not just a matter of deciding which items WET should be applied to. It is important that the correct tax calculation is applied to your WET items as well. Assigning a tax rate code is the best approach for handling WET.

5. Ensure that the Add checkbox next to the Tax Category is ticked. This will ensure that the WET excise amount is added to the transaction total.

6. Under Excise Calculation enter:

I * 0.29

The "I" or internal price variable holds the line item total price. Multiplying this value by .29 is equivalent to calculating 29% of the line item's total sell price.

7. Press the Finished button.

8. From the main menu select File|Exit. When you are prompted to save your changes respond by clicking on Yes.

Nominating WET By Individual Stock Item

You may also specify which stock items to apply WET to, by marking each stock item in your stock control system for which WET applies. You do this by adding the EXCISE1 field to your Stock Control screen. (This assumes that the first excise calculation is used for WET. If you have used the second excise calculation then you should add the field EXCISE2 and for the third, EXCISE3.)

To add the EXCISE1 (or EXCISE2 or EXCISE3) field to your stock control screen do the following:

1. Start the INSTALLATION Workshop program.

2. From the main menu select Install|Build|Screen Builder.

3. Highlight Stock Control from the list (if not already highlighted) and click on the Open button.

4. From the menu select Insert|Field.

5. Point your cursor to a suitable place on the screen where you wish to add your WET applies/does not apply setting, and click once with your mouse.

6. A dialog box will appear. Next to User Field type EXCISE1 (or type EXCISE2 if you have set-up WET in the 2nd calculation row, or EXCISE3 if you have set-up WET in the 3rd calculation row).

7. Press Tab.

8. In the Type field select : Yes/No (check box)

9. Tab to the Label field.

10. Type WET here.

11. Press Ok.

12. From the main menu select File|Exit

13. When prompted to save your changes, press Yes.

14. From the main menu select File|Exit.

Now, when deciding which items WET should be applied to, go into Stock Control, locate those items, and tick the WET field.

However, it is not sufficient to indicate for which items WET applies. You must also ensure that the correct tax rate calculation is performed. This means you must also assign a GST+WET tax rate to your Tax Category field in stock control. For information on how to set-up a GST+WET tax rate, consult the section Applying GST to WET below.

How WET Operates With CAPITAL

Using the above parameters, WET is calculated for each stock item, and added to the transaction total, but the sell price displayed on your transactions does not change. (It is shown ex WET.)

1 x Product ABC at $100 each	$100.00
1 x Product EFG at $100 each	$100.00
Subtotal	$200.00
Total WET	$58.00
Subtotal	$258.00
Total GST	$25.80
Total Transaction	$283.80

The total amount of the excise calculated for a transaction is viewable by clicking on the transaction's Charges/Settings tab page, next to the field Duty/Excise. Excise is calculated for invoices and related transactions, such as sales orders and quotations.

Using the above system, if your product pricing on transactions is inclusive of GST, CAPITAL first subtracts the GST component from the sell price automatically, before calculating the WET. This ensures that WET is never calculated on top of a GST inclusive price.

If a transaction is marked as 'not taxed' the excise component is removed from the transaction's total value.

The advantage of working with sell prices that are exclusive of WET and GST is that is can greatly simplify your customer special pricing and discount price structures. Rather than have to set-up discount pricing for items for which WET applies separately from your other discount calculations and percentages, you can apply the same discount structure across all items.

For example, let's say you are selling a product line for which some items have WET applicable and some don't. For promotional purposes, you decide to offer a 5% discount for the month of June on this product line. It is difficult to apply a discount to a stock item that includes WET, because WET is normally based on the final price your customer receives. So if you altered the price plus WET, the WET calculate would change, which would result in a price (or discount) that would be different from the one you wanted. So while it is possible and often useful to set-up a pricing structure in stock control like so:

Price Field	Label	Description
D	Sell	Sell price exclusive of all excise and taxes.
E	Invoice EX GST	Sell price inclusive of WET but exclusive of GST
F	Invoice INC GST	Sell price including WET and GST
G	RRP	Recommended Retail Price.

It is strongly recommended that you base all your invoicing and ordering price settings on price D ("Sell" in the above example) which excludes all taxes and excise. It is easiest to allow CAPITAL to calculate and manage the excise (WET) and tax (GST) components of the item's sale.

While it can be tempting to instruct CAPITAL to use price E (exclusive of GST but inclusive of WET) when invoicing and ordering, this should generally be avoided. This is because the WET calculation needs to be performed on the last or final distributor sell price. If your users changed the sell price manually on your transaction, or applied a discount, the WET calculation could be subsequently miscalculated.

If you will be invoicing using price D (which is exclusive of all excise and taxes) as recommended, it is necessary to instruct CAPITAL to calculate GST on top of the sell price including WET. How to do this is described in the next section.

Applying GST to WET

If you will be calculating GST and WET on a sell price that is exclusive of both taxes (which is strongly recommended) then you need to set-up a tax calculation that applies to the sell price plus WET. CAPITAL provides 3 special formula variables for this purpose:

EX1 = 1st unit excise component of line item

EX2 = 2nd unit excise component of line item

EX3 = 3rd unit excise component of line item

If you have set your WET calculation as the first excise rate, then the correct tax formula for WET and GST will be:

(I + EX1) * .10

I is the "internal" or normal stock item sell price. EX1 is the first excise component (in this example: WET) and multiplying any amount by .10 will calculate 10% of that amount. For example:

($100 + $29) * .10 = $141.90

To set-up a tax formula in CAPITAL to serve this purpose do the following:

1. Start the INSTALLATION Workshop program.

2. From the main menu select Install|Taxes|Tax Table.

3. Double-click on an unused (empty) tax category. (And carefully note the tax category number you have chosen.)

4. Enter GST+WET next to the Name field and press Tab.

5. Enter: (I+EX1)*.10 in the Formula field.

6. Press the Ok button.

7. Press the Save button.

8. From the main menu select File|Exit.

9. When you are prompted to save your changes press Yes.

For the sake of the example, let us say that tax category 8 is your GST+WET code. You should now assign this code to all stock groups which have WET applicable items in them, under the Tax Category field. You can also assign this code to individual stock items by assigning it to the Tax Category of any particular stock item.

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