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Edited version of your private ruling
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Ruling
Subject: GST and solar energy credits
Question
Is the goods and services tax (GST) applicable to the State Solar Scheme credits (credits) that you receive from the Energy Company?
Advice
Yes, GST is applicable to the credits that you receive from the Energy Company as the credits received are consideration for a taxable supply that you make to the Energy Company.
Relevant facts
You are registered for GST and have installed solar panels on the roof of your storage sheds.
The State Solar Scheme credits you received for supplying electricity back into the grid are more than the electricity you used and the Energy Company pays these excess credits to you.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5.
Reasons for decision
GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if:
· you make the supply for consideration; and
· the supply is made in the course or furtherance of an enterprise that you carry on; and
· the supply is connected with Australia; and
· you are registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
From the facts received, you satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act as:
· your supply of electricity back into the grid is for consideration; and
· the supply of electricity back into the grid is produced by the solar panels that you have installed on the roof of the storage sheds from which the income for your business activities are derived from. Accordingly, the supply of the electricity back into the grid is made in the course or furtherance of an enterprise (business) that you carry on; and
· the supply is connected with Australia as the supply is made from a business that you carry on in Australia ; and
· you are registered for GST.
However, your supply of electricity back into the grid is not a taxable supply to the extent that it is GST-free or input taxed.
There is no provision under the GST Act that makes your supply of electricity back into the grid GST-free or input taxed. Accordingly, your supply of electricity back into the grid is a taxable supply under section 9-5 of the GST Act and you will be liable to pay GST on this supply.
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