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  • REC agents

    A Renewable Energy Certificate (REC) agent can be the installer or a third party, such as an REC trader, aggregator or system wholesaler.

    Assignment of STC rights

    A system owner can choose to assign their right to the STCs to a REC agent. Generally, payment to the system owner is provided as a discount or cash-back offer against the installation price.

    System owner – not registered for GST

    As a REC agent, you aren't entitled to claim GST credits on the purchase of the assignment of STCs if you purchase the assignment from a system owner who isn't registered or required to be registered for GST. This is because the assignment of the STCs is not a taxable supply.

    Example: Assigning STCs to REC agent

    Lukas is a REC agent, as well as an installer.

    Lukas has installed a solar water heater system at John's home. Lukas gives John an up-front discount on the purchase price of installation, as John agreed to assign his entitlement to create the STCs to Lukas.

    John's assignment to Lukas is not a 'taxable supply', as John is not carrying on a business and is not registered or required to be registered for GST.

    Lukas is not entitled to claim GST credits on the purchase of the right to create the STCs.

    End of example

     

    Example: Assigning STCs to a REC agent who is not an installer

    Peter, an installer of solar water heater systems who is registered for GST, sells a system to Jane for a GST-inclusive price of $4,400. Jane is not carrying on a business and is not registered or required to be registered for GST.

    Jane assigns her right to create the STCs in relation to the system to Sunxyz Pty Ltd, a REC agent. Jane is paid for this assignment in the form of an 'up-front discount' on the purchase and installation of the system. The 'up-front discount' of the system is $600, so Jane pays a net price of $3,800; that is, the GST-inclusive price of $4,400 less $600 'up-front discount'.

    The assignment of the right to create the STCs is a separate transaction between Jane and Sunxyz Pty Ltd. Sunxyz Pty Ltd pays Peter $600, being the amount equivalent to the 'up-front discount' on the system, received by Jane. Sunxyz Pty Ltd is registered for GST but cannot claim the GST credit in relation to the $600. This is because Jane is not carrying on a business and is not registered or required to be registered for GST.

    Peter's supply of the installed system to Jane has a GST-inclusive price of $4,400. Peter's GST liability is calculated before the reduction in price arising from the 'up-front discount' for the assignment of the right to create the STCs. Peter is liable to pay GST of $400. Peter does not have a GST liability in relation to the $600, as this is part of the $4,400.

    End of example

    System owner – registered for GST

    A system owner who is registered or required to be registered for GST makes a taxable supply when they assign their right to create STCs for a system that is used in their business. System owners are required to issue you with a tax invoice if the assignment is more than $82.50 (GST inclusive).

    As a system installer, you are entitled to a GST credit on the purchase of the assignment if you are registered or required to be registered for GST.

    Transferring and selling STCs

    You pay GST on your transfer or sale of STCs if you are registered or required to be registered for GST.

      Last modified: 25 Feb 2020QC 24820