Electricity and Gas Industry Partnerships – issues register

Solar power grid-connected electrical systems

Where appropriate, individual issues in this issues register include a reference to a public ruling which is related to the relevant issue. In some cases, the issue is itself labelled as a public ruling for the purposes of section 105-60 of Schedule 1 to the Taxation Administration Act 1953. Where an issue in this issue register simply sets out the way the law applies, rather than dealing substantially with a question of legal interpretation, we have added to the item the description 'non-interpretative'.

From 1 July 2010, issues labelled as a public ruling in this register will continue to be a public ruling even though section 105-60 of Schedule 1 of the Taxation Administration Act 1953 has been repealed.

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on issues in this register that are a ruling, we must apply the law to you in the way set out in the ruling. However, if we are satisfied that the ruling is incorrect and disadvantages you, we may apply the law in a way that is more favourable for you - provided we are not prevented from doing so by a time limit imposed by the law. You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Issues in this register that have not been labelled as public rulings, constitute written guidance. If you follow our information on these issues and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty. Also, if you acted reasonably and in good faith we will not charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to.

1 Are there any GST implications for owners of grid-connected solar power generation equipment in respect of electricity supplied via the network?

Yes, if the solar owner is registered for GST.

The supply of solar generated electricity from a solar owner to an electricity retailer is a supply for GST purposes. If the solar owner is registered for GST and the supply is made as part of carrying on their enterprise, it is a taxable supply.

The supply of solar generated electricity from a solar owner via the network is a separate supply from the supply of electricity by an electricity retailer to the solar owner. Therefore, the electricity supplies made by the solar owner and the electricity retailer need to be accounted for separately. Where there are mutual supplies for consideration, the GST law does not allow the price for one supply to be reduced by the price of another.

When an electricity retailer supplies electricity to a solar owner, the electricity retailer must calculate the GST on the full value of the electricity they supply to the solar owner, not on the net amount the solar owner pays to the electricity retailer.

See also:

For the source of ATO view, refer to paragraphs 67 to 70 and 92 of GSTR 2006/9 - Goods and services tax: supplies

2 What value is used to determine the GST payable on a taxable supply of electricity by an electricity retailer to a solar owner?

The GST payable on a taxable supply of electricity by an electricity retailer to a solar owner is calculated on the value of electricity supplied by the electricity retailer. This is not offset or reduced by any electricity that may be supplied by the solar owner to the electricity retailer.

The supply of electricity by an electricity retailer is separate from the supply by the solar owner to the electricity retailer.

See also:

Non-interpretative - other reference (see paragraphs 67 to 70 and 92 of GSTR 2006/9 - Goods and services tax: supplies