The Australian Government announced reforms to the Safeguard Mechanism to help industry reduce emissions in line with Australia’s climate targets. From 1 July 2023 large industrial facilities will be issued Safeguard Mechanism Credits (SMCs) for emissions that are below baseline levels. This measure is now law.
SMCs will have the same tax treatment as Kyoto units and Australian Carbon Credit Units (ACCUs) and will receive the same GST-free treatment as other specified units, like ACCUs. The changes will apply to an entity’s reporting obligations for income years commencing from 1 July 2023.
The Safeguard Mechanism (Crediting) Amendment Act 2023External Link amends the National Greenhouse and Energy Reporting Act 2007 and other legislation, establishing the framework to implement key elements of the reforms, such as incentives for facilities to reduce emissions.
The ATO will provide more information about the tax treatment of SMCs from 1 July 2023.
The Clean Energy RegulatorExternal Link administers the National Greenhouse and Energy Reporting scheme and the Safeguard Mechanism.The Australian Government announced reforms to the Safeguard Mechanism to help industry reduce emissions in line with Australia’s climate targets.