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This edited version has been archived due to the length of time since original publication.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: 1012609349195

Ruling

Subject: Goods and services tax (GST) and solar panel generated electricity

Question

Is GST payable by you on surplus electricity supplied by your solar panels to the grid and measured by your digital meter?

Answer

No.

Relevant facts and circumstances

Solar panels were installed on the roof of the house in which you live.

You are a participant in a Feed-In Tariff (FIT) scheme.

Your solar system is configured to supply electricity for your household's domestic needs first and the excess electricity is fed into the grid.

The owner of the grid (X) pays you FIT for the electricity you supply to the grid. The FIT partly offset the charge for electricity supplied to you from the grid. The rate you are paid for the electricity you supply to the grid is at a significant discount to what you pay X for electricity you consume from the grid at night etc.

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-20

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

Reasons for decision

Summary

You are not liable for GST to the Australian Taxation Office on your supply of the electricity because you do not supply the electricity in the course or furtherance of an enterprise that you carry on.

Detailed reasoning

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

You make a taxable supply if:

      (a) you make the supply for *consideration; and

      (b) the supply is made in the course or furtherance of an *enterprise that

      you *carry on; and

      (c) the supply is *connected with Australia; and

      (d) you are *registered, or *required to be registered.

    However, the supply is not a *taxable supply to the extent that it is *GST-free

    or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

Enterprise is defined in section 9-20 of the GST Act. Enterprise includes:

    • an activity or series of activities done in the form of a business (paragraph

      9-20(1)(a))

    • an adventure or concern in the nature of trade (paragraph 9-20(1)(b))

Where:

    • a householder participates in a FIT scheme;

    • the solar panels are installed on the roof of the house in which they live;

    • the solar system is configured to supply electricity for the householder's domestic needs first and the excess electricity is fed into the grid; and

    • the householder enters into the FIT scheme in order to offset some of their domestic electricity costs,

we do not consider that the householder is carrying on an enterprise of selling electricity or that the arrangement is connected with any enterprise that the householder carries on. We consider that the arrangement is private or domestic.

You are participating in a FIT scheme.

We consider that your participation in the FIT scheme is a private or domestic arrangement because:

    • the solar panels are installed on the roof of the house in which you live;

    • the solar system is configured to supply electricity to your domestic needs first and the excess electricity is fed into the grid; and

    • your FIT credits merely offset some of your domestic electricity costs.

Hence, you do not supply electricity in the course or furtherance of an enterprise that you carry on.

As you do not meet the requirement of paragraph 9-5(b) of the GST Act, GST is not payable by you on your supply of electricity to the grid.


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