| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012244761399
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Solar panels
Question:
Will the payments you receive from the electricity company be included in your assessable ncome?
Answer:
No.
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You installed a X kW solar panel system on your residence to reduce your electricity bills.
The home is your private residence and is not used for income producing purposes.
The arrangement is a net scheme, with the electricity you consume being offset against the electricity which you generate. The system is currently generating more power than you consume.
You are entitled to X cents per kWh under the solar scheme.
You have received several payments from the electricity company.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5 and
Income Tax Assessment Act 1997 section 6-10.
Reasons for decision
Sections 6-5 and 6-10 of the Income Tax Assessment Act 1997 provide that the assessable income of a resident taxpayer includes ordinary income and statutory income derived directly or indirectly from all sources during the income year.
Generally, if an amount received is not considered ordinary income or statutory income, it is not included in assessable income.
Whether a receipt or a credit is income according to ordinary concepts is determined based on a number of factors. These factors include the motivation for undertaking that activity, how the activity is undertaken and whether there is a real prospect of profit from the activity. If the characteristics of the activity change, the receipts or credits from the activity may become or cease to be income according to ordinary concepts as a result of those changes.
You have installed solar panels to generate electricity and have received payments from the electricity company for the electricity you export to the grid. Taking into account the amount of equipment used to generate the electricity and the current pricing structure, we do not consider that the purchase of the system is primarily an income earning activity. You produce the electricity for a domestic purpose only. The payment that you will receive from the electricity generation would not be classed as income according to ordinary concepts under your present arrangement.
There are no specific legislative provisions relating to payments received from electricity supplies, therefore it is not statutory income.
Any income you receive from the electricity retailer for the power generated by your solar panels and exported to the grid are not considered ordinary income or statutory income and are therefore not included in your assessable income.