Licence approved
Posted: Tue Mar 20, 2018 1:37 pmI've successfully applied for a licence to manufacture alcohol and am posting this to share the experience. My intention is to operate a small micro distillery (gin) and cellar door and this information relates to that eventual outcome.
For those maybe not aware, in Australia you cannot manufacture alcohol legally without a licence. No if's, but's or maybe's! You can own a still and you can use it to distill say essential oils or the like but you cannot use it to manufacture alcohol without a licence. Also, you must have Australian Taxation Office (ATO) permission to have possession of any still over five litres in capacity, regardless of what it's used for.
When I first considered making spirits I found that there was very little information readily available to help frame an application for a licence. Hopefully this post will provide some useful directions for someone else contemplating a licence. It's not difficult, however does take some time and effort.
The licence is granted by the ATO (free) who assign a case officer who handles the application from start to finish. It's important that there is good rapport with this case officer whom I found to be very helpful. In my instance all correspondence but for my first verbal inquiry, was by email and it took a couple of months to achieve a result. Were I doing it again it'd likely take a few weeks, such is the knowledge that I now have but didn't have before.
The ATO website has a lot of linked information regarding the manufacture of alcohol and a good place to start is with the Application form NAT 5906. Do have an ABN set up (free) prior which does help to ensure that the application is not held up. In my case the ABN was set up for a sole trader. I would strongly recommend a business plan is developed and that it is framed to cover the following minimums:
Business goals and objectives – effort, timing
Organisational structures & resources – staffing
Business operations – products,distribution, pricing, payments, production, assets, people, risks etc
Market analysis & strategy – competition, SWOT, promotional
Financials
I probably spent a week developing my business plan which I submitted as an initial part of the application process and it was well received by the ATO I think because it addressed/answered a lot of their requirements up front. Some of the stuff that I hadn't covered (this held things up) and that required me to further research answers were:
Detail of Manufacturing Process – input ingredients, botanicals infusion, cuts determination
Obscuration handling – eg: a laboratory still, IR technology
Site plan – production, storage, cellar door
Security – theft is a concern
Prior experience – anything at all that relates and I believe there are also training courses.
Equipment – existing and planned
Records keeping – excel, MYOB etc
Insurance – to cover stored alcohol theft
Disposal of off-spec alcohol – requires ATO permission else excise is due
Excise is paid on all manufactured alcohol and is attracted as soon as the alcohol leaves the bonded area. In my case the bonded area is the production facility with integrated cellar door, so excise is not due until a customer leaves with product. If however I take some bottles to a fair then I pay excise whether I subsequently sell them at the fair or not. Similarly I pay excise on stolen alcohol product. I elected to declare and pay the excise on a monthly basis and I have to report even if I have a NIL return. The excise reporting is simple and I do it via the ATO business portal.
Getting a licence was the first step for me in this venture and I didn't have specifics regarding equipment procurement or specific manufacturing processes and techniques. I certainly wasn't about to order equipment or build infrastructure not knowing whether or not my application for a licence was going to be knocked back. I had no way of knowing the likelihood of success. Looking back over the application process I have to say that whilst there are a lot of questions of necessity asked by the ATO they are all answerable, and an applicant should feel confident of a successful outcome. Preparation and research are all that is required. I felt that the ATO was on my side and responsive to any queries I had. At the end of the day, they want the excise revenue.
Anyway, licence in hand now we move to Step 2 - council development approval .... !
For those maybe not aware, in Australia you cannot manufacture alcohol legally without a licence. No if's, but's or maybe's! You can own a still and you can use it to distill say essential oils or the like but you cannot use it to manufacture alcohol without a licence. Also, you must have Australian Taxation Office (ATO) permission to have possession of any still over five litres in capacity, regardless of what it's used for.
When I first considered making spirits I found that there was very little information readily available to help frame an application for a licence. Hopefully this post will provide some useful directions for someone else contemplating a licence. It's not difficult, however does take some time and effort.
The licence is granted by the ATO (free) who assign a case officer who handles the application from start to finish. It's important that there is good rapport with this case officer whom I found to be very helpful. In my instance all correspondence but for my first verbal inquiry, was by email and it took a couple of months to achieve a result. Were I doing it again it'd likely take a few weeks, such is the knowledge that I now have but didn't have before.
The ATO website has a lot of linked information regarding the manufacture of alcohol and a good place to start is with the Application form NAT 5906. Do have an ABN set up (free) prior which does help to ensure that the application is not held up. In my case the ABN was set up for a sole trader. I would strongly recommend a business plan is developed and that it is framed to cover the following minimums:
Business goals and objectives – effort, timing
Organisational structures & resources – staffing
Business operations – products,distribution, pricing, payments, production, assets, people, risks etc
Market analysis & strategy – competition, SWOT, promotional
Financials
I probably spent a week developing my business plan which I submitted as an initial part of the application process and it was well received by the ATO I think because it addressed/answered a lot of their requirements up front. Some of the stuff that I hadn't covered (this held things up) and that required me to further research answers were:
Detail of Manufacturing Process – input ingredients, botanicals infusion, cuts determination
Obscuration handling – eg: a laboratory still, IR technology
Site plan – production, storage, cellar door
Security – theft is a concern
Prior experience – anything at all that relates and I believe there are also training courses.
Equipment – existing and planned
Records keeping – excel, MYOB etc
Insurance – to cover stored alcohol theft
Disposal of off-spec alcohol – requires ATO permission else excise is due
Excise is paid on all manufactured alcohol and is attracted as soon as the alcohol leaves the bonded area. In my case the bonded area is the production facility with integrated cellar door, so excise is not due until a customer leaves with product. If however I take some bottles to a fair then I pay excise whether I subsequently sell them at the fair or not. Similarly I pay excise on stolen alcohol product. I elected to declare and pay the excise on a monthly basis and I have to report even if I have a NIL return. The excise reporting is simple and I do it via the ATO business portal.
Getting a licence was the first step for me in this venture and I didn't have specifics regarding equipment procurement or specific manufacturing processes and techniques. I certainly wasn't about to order equipment or build infrastructure not knowing whether or not my application for a licence was going to be knocked back. I had no way of knowing the likelihood of success. Looking back over the application process I have to say that whilst there are a lot of questions of necessity asked by the ATO they are all answerable, and an applicant should feel confident of a successful outcome. Preparation and research are all that is required. I felt that the ATO was on my side and responsive to any queries I had. At the end of the day, they want the excise revenue.
Anyway, licence in hand now we move to Step 2 - council development approval .... !