Woolworths liquor is understood to be the subject of an investigation by the Australian Taxation Office, which issued a taxpayer alert yesterday to entities attempting to slash their wine equalisation tax (WET) bill.
The wine tax is normally levied at 29pc on the final wholesale price of wine.
However, a "half retail price method" can be used to calculate WET when an indirect marketer is used, which is more tax effective for wine sold at low price margins and in high volume.
The Australian Financial Review reports that Tax Commissioner Michael D'Ascenzo said yesterday, "We know these arrangements are in the market and are warning wine growers, producers and retailers to be cautious about entering into these arrangements as they may be ineffective under the law".
Industry sources estimated Woolworths might have saved about $30 million annually in WET through an indirect marketing structure set up through its Dan Murphy's discount liquor stores.
Woolies spokesman Luke Schepen said: "We are looking through the ATO alert and assessing it."
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