The ATO has released guidelines around distillers producing hand sanitiser during the current COVID-19 crisis.
It has received queries from excise licence holders who are seeking to adapt their business model to use spirit for hand sanitiser.
Hand sanitiser does not ordinarily attract excise as its alcohol content has usually been treated (denatured) to make it unfit for human consumption.
However, there are regulatory requirements that apply to the production and use of concessional spirits. For example, businesses need to apply for ATO permits to purchase (undenatured) spirit from licensed manufacturers for use in the commercial production of hand sanitiser.
Denatured spirit may also be suitable for making hand sanitisation and other commercial cleaning products, and can be purchased without restriction.
The ATO has offered advice on how it will support the further production of hand sanitiser during these difficult times.
It will grant increases to the quantity of spirits that existing permit holders can obtain. This will be done at the time of phone contact if the client establishes satisfactory Proof of Identity during the call.
Licensed distillers that already hold an Excise Manufacturer licence to produce or distil spirits can, without additional approvals, produce hand sanitiser and report it by using the free-rate tariff item on their Excise return.
If a licensed distiller wishes to repurpose existing alcohol or manufacture alcohol for supply to hand sanitiser manufacturers without incurring an excise liability, they may do so and simply need to report that by using the free-rate tariff item on their Excise return. This also applies to supplying other commercial manufacturers with concessional spirits – for example, for the production of other cleaning products.
Other licensed entities (eg breweries) can apply for permission to manufacture or obtain spirit for the purposes of producing hand sanitiser.
The ATO will fast-track these applications and will aim to process them within 1-2 days. Licensed entities can call the ATO to expedite the process. Once approved, they can report it by using the free-rate tariff item on their Excise return.
As is ordinarily the case, hospitals, pharmacists, health care practitioners, education institutions, and government institutions can all receive an unrestricted amount of concessional spirits to meet their manufacturing, scientific or medical needs. This does not require a permit.
Drinks industry steps up to help during sanitiser shortage
Beenleigh Rum Distillery and Bundaberg Rum Distillery have announced they will focus on the production of ethanol for hand sanitiser immediately, using existing production lines and staff.
The iconic Queensland rum distillers have stepped up to help the state during the COVID-19 crisis.
David Smith, Managing Director of Bundaberg Rum’s parent company Diageo Australia, said the company had a duty to support the community in this unprecedented time of need through its donation of ethanol.
“Bundaberg Rum is a Queensland icon, we’ve felt the love of Australians since our distillery was first established more than 130 years ago in 1888,” Smith said.
“At a time like this we will always step up and contribute when Australians need it most.”
In NSW, the Archie Rose production team has reallocated its spirits production capacity to hand sanitiser in response to the COVID-19 pandemic.
Meanwhile, Manly Spirits Company is also producing hand sanitiser. It announced last week: “We’ve had a number of local charities and organisations contact us in desperate need of sanitiser for their operations. We knew that making hand sanitiser available for these groups was simply our part to play in these crazy times
Additional ATO support for businesses impacted by COVID-19
The ATO will work with organisations to defer some payments and vary instalments that are due. These include your income tax, activity statement, pay as you go (PAYG) instalments, FBT and excise payments.
Excise clients are still required to lodge during this period even if they can’t pay in full. Call if you are unable to lodge.
Commissioner of Taxation Chris Jordan is encouraging businesses impacted by the coronavirus to get in touch with the ATO to discuss relief options.
“We know that many businesses and communities are being heavily affected by the challenging economic conditions created by the outbreak of COVID-19,” he said.
“The ATO will work shoulder-to-shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure.
“Once you contact us, we’ll tailor a support plan for your needs and circumstances.
“Support measures could include deferral of some payments, quicker access to GST refunds, and options to enter low interest payment plans for existing or future tax debts.”
We understand this is a time of significant uncertainty and that we will need to be flexible in how we help businesses.
Options available to assist businesses impacted by COVID-19 include:
- Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
- Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.