Oct 20, 2020 / News

Wine and Viticulture

Restructuring Your Business and WET Producer Rebate

Has your business outgrown its current structure? Are you looking to add an extra layer of asset protection? Are you thinking about future succession planning? If you said yes to any of the above, then a business restructure could be the answer.

When planning a business restructure, you need to consider whether your business is eligible for the following concessions:

• Small Business restructure rollover relief
• Stamp duty relief for transfers of family farms in SA
• Stamp duty relief for transfers of commercial property in SA

In addition to these concessions there are a number of critical tax considerations you will need to consider including:

• WET Producer Rebate eligibility
• GST consequences of restructuring
• Capital Gains Tax consequences of restructuring
• Land tax and aggregation consequences in SA
• Asset protection requirements 

For Wine producers, a critical tax consideration when restructuring is whether a change in business structure will impact your eligibility to claim the WET producer rebate on taxable WET sales.

Under new rules which took effect from 1 July 2018, the WET producer rebate can only be claimed if the producer meets certain requirements, one of which is the 85% ownership requirement.

This requires the producer to maintain at least 85% ownership of the ‘source product’ (i.e. whole unprocessed grapes) from the beginning of the wine making process all the way through to the final packaging of the wine. Careful consideration is therefore needed when restructuring so that the producer doesn’t lose the nexus of ownership of both the grapes and the final manufactured wine.

If you have recently restructured your wine business and believe you may have overlooked or don’t meet the 85% ownership requirement, there are potential legal options to rectify the situation.

Please contact George Papanicolaou, Raoul Stevenson or your Nexia Edwards Marshall Advisor who will be able to assist you review your current business structure and eligibility to claim the Small Business restructure concessions and WET Producer Rebate.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.