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Edited version of private ruling

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Ruling

Subject: GST and feeding solar panel generated electricity into the electricity grid

Question 1

Are you required to remit goods and services tax (GST) when you supply electricity from your Solar System to the electricity grid for a Feed in Tariff (FIT)?

Answer

No.

Relevant facts and circumstances

You are not registered for GST

You lodged an application with an energy provider to install a solar panel system.

You installed a solar panel system on the roof of your house.

You paid for the cost of installation and equipment.

Your primary purpose of installing the solar panel is to generate sufficient electricity to offset the energy used by your household and to insulate yourself from future price rises.

The electricity produced from the solar panel that you have installed is being fed into an electricity grid in return for a FIT under a Solar Bonus Scheme introduced by a state government.

You will sell the electricity that you produce by feeding into the electricity grid at the rate of x cents per kilowatt.

You expect to pay off the cost of installation and equipment approximately in a few years time.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subsection 7-1(1).

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5.

Reasons for Decision

Summary

You are not required to remit GST when you supply electricity from your solar panel system to the electricity grid for a FIT as you are not making a taxable supply.

Detailed reasoning

Under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), GST is payable where you make a taxable supply.

You make a taxable supply where you satisfy all of the requirements of the provision that deals with taxable supplies.

Under this provision, you make a taxable supply if:

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

In your case we will consider Enterprise

whether your activities amount to an enterprise.

Miscellaneous Taxation Ruling MT 2006/1 provides guidelines on the meaning of the term 'enterprise' for the Australian Business Number (ABN) purposes.

Paragraph 1 of Goods and Services Tax Determination GSTD 2006/6 provides that the guidelines in MT 2006/1 are considered to apply equally to the term 'enterprise' as used in the GST Act and can be relied upon for GST purposes.

Of relevance in your case is the provision that an enterprise includes an activity or series of activities in the 'form of a business'.

Form of a business

Paragraph 170 of MT 2006/1 explains the meaning of 'the form of a business. It provides:

Paragraphs 177 to 179 of MT 2006/1 provide guidance on the meaning of business. They state:

179. There is no single test to determine whether a business is being carried on. Paragraph 12 of TR 97/11 states that 'whilst each case might turn on its own particular facts the determination of the question is generally the result of a process of weighing all the relevant indicators'. TR 97/11 can be referred to for a fuller discussion on whether a particular activity constitutes the carrying on of a business.

From the information that you have provided we find that:

On the basis of the above facts, it is considered that, in your situation, the production of electricity by the solar panel and sending it to the electricity grid in return for a FIT is not an activity in the form of a business.

Consequently, you do not supply the electricity in the course or furtherance of an enterprise that you carry on and you do not satisfy the second condition of the GST Act.

Since you do not satisfy all of the conditions of a taxable supply, you are not required to remit GST to the Australian Taxation Office.

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