How to manage Wine Equalisation Tax (WET)

George Sutton
Updated : May 01, 2025 12:57 Created : February 15, 2022 02:17

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What is Wine Equalisation Tax?

Products such as wine have an additional excise tax component on top of the GST, called Wine Equalisation Tax (WET), which is a compound rate. Compounding tax means GST is applied to an order's total that already includes the compound tax e.g. WET, rather than applying a 'combined' tax rate on a net amount.

For example, if GST had a 10% rate and WET had a 29% rate and a bottle of wine sold for $100, the order's total and taxes would be calculated as:

Order Total including WET tax = $100 + 29% tax = $129.00
Order Total including all tax = Order Total including WET tax + GST = $129 + 10% tax = $141.90

Manage WET with Unleashed

To manage WET inclusive Sales Orders in Unleashed when integrated with an accounting provider e.g. Xero, Quickbooks or Access Financials, you will need to complete the following steps for both Retail and Wholesale WET's:

Setup the compound tax for WET in your integrated accounting software.
Sync the compound tax with Unleashed.
Split the dispatched journal's tax back in to WET and GST in your accounting software.

Each of the above steps have been outlined below for further detail, using Xero as the example accounting software.

Setup the compound tax for WET in your integrated accounting software

To setup a compound tax in Xero for WET:

In Xero, go to Accounting, Advanced and select Tax Rates.
Click on New Tax Rate.
Enter a Tax Rate Display Name, e.g. WET + GST.
Select Sales as the Tax Type.
Under Tax Component, enter GST and 10% and select the Compound option.
Click Add a Component, then enter WET and the appropriate tax rate:
- Retail WET is 18.9768%.
- Wholesale WET is 29%.
Make a note of the Effective tax rate displayed.
Click Save.

Sync the compound tax with Unleashed

To import and map your new compound tax in Xero with Unleashed:

In Unleashed, from the main menu head to Integration, Integration Store and select Xero.
Go to the Manage your Data tab.
Select the Import now button next to Import Taxes.
Navigate to Unleashed's main menu and go to Settings, System and select Taxes.
In the top right of the Taxes page, click on Add.
An Add Tax window will display, where you should advise the new tax's details:
- Tax Description/Name, e.g. GST + WET.
- Tax Code: GST, e.g. GST + WET.
- Tax rate: This must be the same as the Effective Tax Rate displayed in Xero.
- Accounting Tax: Select the new GST + WET tax from the menu.
- Tick Sales Tax.
Click Add.

For more details on creating Taxes in Unleashed, see Taxes.

Split the dispatched journal's tax back in to WET and GST in your accounting software

Once a Sales Invoice that includes WET has been dispatched and an Invoice generated in Xero, you will need to update the invoice journal to split the tax into GST and WET. The process in splitting the tax will differ depending on whether a Wholesale or Retail WET was used.

Wholesale WET

This section will split Wholesale GST & WET (wholesale) Payable ready to be journaled into the appropriate accounts. This step should be completed on a periodic basis.

In Xero, go to Accounting, Reports and select Account Transactions.
Select the relevant Account and filter by the Wholesale GST + WET (wholesale) tax.
Make a note of the Total displayed for the report's Running Balance.
Determine the total WET tax, using the following formula: Total Running Balance * WET tax = Revenue exc. WET tax.
- Example: 6792.00 * 0.29 = 1959.68
Create a Manual Journal Entry in Xero, to debit GST from the Revenue account and credit WET to the WET Payable account.
1. Select Accounting, Manual Journal Entry.
2. Select New Journal.
3. Add Narration e.g. “To Split WET from GST”.
4. Add a Date and make sure Amounts are is Tax Exclusive.
5. Add a Debit line inclusive of 10% GST that is 10 times the Revenue exc. WET tax (step 4, example $1,969.68 x 10), where the Account is Revenue.
6. Add a Credit line exclusive of GST to the same revenue account with the same amount as above (e.g. 19,696.8).
7. Add another Credit line exclusive of GST to the WET Payable (current liability) account, for the Revenue exc. WET tax.
8. Select Paid.

NOTE: At this stage you can find the GST by the following formula; GST = (Total Revenue exc. GST & WET + WET) x 0.1. This can be compared to the GST remaining in the account (via the Account Transactions report mentioned in step 1) to double check the remaining GST in the account is correct if you so choose.

Retail WET

This section will split the GST & WET (retail) Payable ready to be journaled into the appropriate accounts. This should be done on a periodic basis.

NOTE: The following method and formulas are based on the ATO “Half Retail” method. This method can be used for fact checking at an order level if required. For more details, see Retail sales and own use. The Average Wholesale Price method is not supported by this workflow.

In Xero, go to Accounting, Reports and select Account Transactions.
Select the relevant Account and filter by the Wholesale GST + WET (retail) tax.
Make a note of the Total displayed for the report's Running Balance.
Determine the total WET tax, using the following formula: Running Balance * WET = WET (Retail)
- Example: $2000 + 0.189768 = $379.536
Create a Manual Journal Entry in Xero, to debit GST from the Revenue account and credit WET to the WET Payable account.
1. Select Accounting, Manual Journal Entry.
2. Select New Journal.
3. Add Narration e.g. “To Split WET from GST”.
4. Add a Date and make sure Amounts are is Tax Exclusive.
5. Add a Debit line inclusive of 10% GST that is 10 times the Revenue exc. WET tax (step 4, example $379.536 x 10 = $3795.36), where the Account is Revenue.
6. Add a Credit line exclusive of GST to the same revenue account with the same amount as above (e.g. 3795.36).
7. Add another Credit line exclusive of GST to the WET Payable (current liability) account, for the Revenue exc. WET tax. This should result in a zero sum journal.
8. Select Paid.

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