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  • Assigning the right to create STCs

    If you assign the right to create the STCs on the installation of your eligible system, it is regarded as a sale for GST purposes.

    If you are not registered or required to be registered for GST, then the assignment will not be subject to GST.

    Where the assignment leads to price offsetting, the GST consequences of purchasing the system and assigning the STCs need to be considered separately.

    Example: Assigning the right to create STCs

    John Little has installed an eligible solar water heater on his private residence. He is not:

    • registered or required to be registered for GST
    • carrying on an enterprise.

    John assigns his entitlement to create STCs to the retailer for a discount on the purchase price of the system.

    There are no GST consequences for John in making this assignment. Therefore, the retailer is not entitled to claim GST credits on the purchase of the right to create the STCs (that is, the discount).

    End of example

    Price offsetting

    Price offsetting commonly occurs in the purchase of small-scale renewable energy systems. The customer chooses to assign their right to create STCs to another entity in return for a reduction in the purchase price.

    For GST purposes, the GST consequences of each transaction have to be accounted for separately. There is no provision to 'net off' sales and apply GST to the net figure.

    Example: Separate GST calculations

    A retailer of a solar water heater, who is an RET-registered agent, sells an eligible system to Jane Little for a GST-inclusive price of $4,400. Jane signs an agreement assigning her right to create the STCs in relation to the solar water heater to the retailer. Rather than paying Jane directly, the retailer pays for this assignment in the form of a reduction in the price of the solar water heater.

    The reduction in the price of the solar water heater (commonly referred to as a credit, discount or rebate) is $600, so Jane pays a net price of $3,800.

    There are two transactions happening here which need to be accounted for separately for GST purposes.

    The first transaction is the supply of the installed solar water heater to Jane for the GST-inclusive price of $4,400. The retailer must pay GST of one-eleventh of this price. Note that this GST liability is calculated before the reduction in price arising from the 'payment' (discount) for the assignment of the right to create the STC as that is a separate transaction.

    The second transaction is Jane's assignment of the right to create STCs to the retailer. She receives consideration of $600 for this assignment, applied as a reduction in the price she pays for the solar water heater.

    Jane is not registered or required to be registered for GST, so this second transaction is not subject to GST. However, if the customer is registered or required to be registered for GST and the transaction is part of carrying on its business this transaction would come under the definition of a 'taxable supply' and the customer would have to pay GST of one-eleventh of the price of the assignment. The GST-registered customer should provide a tax invoice to the retailer so they can claim the relevant GST credits.

    It is not possible to 'net off' these supplies and apply GST to the net figure. Each transaction must be accounted for separately.

    End of example
      Last modified: 17 Mar 2017QC 24820