Hello hello good people!
Thought I would fill you in with a bureaucratic update that I’ve been dealing with for the last month or so… especially for those of you that have been following the journey of being a small fruit winemaker here in Aotearoa.
Back in June this year I was audited by Customs NZ. Customs are the folk that collect the excise tax that is placed on any alcohol, tobacco or petrol product, other countries call it the ‘sin tax’. If you want to know more about excise tax you can go to my article here. (By the way excise tax went up another 3% this July, I’m wearing it at the moment but I have had to put my fortified wine up to $50, sorry!)
So, Customs were not here to audit my accounts but to audit my records of manufacturing and if I have the wine that I say I have and if all my records have all the information that they need, to be satisfied that I am paying my excise tax and that they can easily follow the trail of my wine and know that I’m paying my tax in a timely manner. I have a fairly rustic system of pen and paper, but it works for me and once I explained a few things it was clear to them that I am a studious keep of records and that I was above board, phew! Until they asked a question that frankly blew me out of the water…
“So, when you go to markets you mark down every wine that has left this area and put them into your excise entry?”
Me (innocently): Yeah, the ones that sell, of course!
Them: Ooohh, no. Once your wine has left your licensed manufacturing area (LMA), it is liable for excise tax, whether it sells or not.
Boom!
Well. And there started a conversation between one incredulous person (me) and two auditors trying to calmly get it through to me that this is the law and - really very nicely- how I’ll be able to go forward with this new knowledge. The first thing that came out of my mouth was that there was no way I could afford to pay excise tax on unsold product every month, I’ve had some dismal markets in my time where I might take 30 wines and sell three! Their first suggestion was that I move onto paying my excise annually, which would’ve been grand, but my Customs officer turned me down for that; I later learned that due to so many alcohol businesses going under and owing Customs if you insist on going annually they will want your house/property/first born child as collateral.
The next suggestion was to not take as many wines to markets. Now, first off let me just reassure you all, I don’t pay excise tax anymore than once on a bottle. When my wines come back from a market they now go into a special rack in the winery with the label “excise paid”. It’s a bloody malarkey, took me at least three days to get my head around it and make the changes I needed to do; rearrange the winery for said special rack, change my records system and work out how exactly I keep on top of what I have paid for and what I haven’t, when it is a mix of market sales and online sales. Anyhoo, I think I have it sorted.
Then I got an email requesting I reply showing how I have/will rectify the five issues that came out of my audit. So this got sent out along with supporting documents etc… and I heard nothing back. After a week I sent a follow up email and my auditor said yes, received, I’m just working out how to reply. Aye carumba! Am I that much out of the ball park that it’s taking him over a week to work out how to break it to me!!?? (As an aside, he is a very nice man and is a credit to Customs NZ)
Turns out I was on the right path but my system required a few more tweaks to ensure my traceability is entirely transparent. I now have a very boring double page spread of columns, headings and numbers everywhere, which I sent out today and hopefully gets the tick…eventually! This may be the push I didn’t know I needed to learn how to do spreadsheets… boooring!
Thankfully this has all happened whilst there is nothing happening in the winery except for slow winter ferments just hanging out.
Packing for markets now has a different flavour. I’m trying to be a bit more frugal in what I take, being “realistic” about how much I’ll really sell. But it’s made me realise that when I’m packing for a market I’m packing hope; I know that I probably won’t sell all six of those bottles of Blackalicious (BTW, only have four bottles left of Luscious Blacklicious) but I might and wouldn’t it suck to not have enough??
And honestly, seriously, what is the great rush in getting our money when they get it eventually anyway? (The auditors did actually say that by rights, Customs could charge excise as soon as you start manufacturing your alcohol, but they kindly wait until it leaves your LMA until charging. Kindness personified!)
