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Edited version of your written advice
Authorisation Number: 1012864394845
Date of advice: 21 August 2015
Ruling
Subject: Income - solar feed-in tariff
Question 1
Is income received from solar feed-in tariff rebates assessable income?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You have solar panels installed to generate electricity. Any electricity generated which is not used by you is fed back into the electricity grid.
You receive solar feed-in tariff rebates against your electricity bill from your energy retailer and the state government.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-10
Reasons for decision
Sections 6-5 and 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides 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.
Ordinary 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.
Statutory income
There are no specific legislative provisions relating to credits received from electricity suppliers, therefore it is not statutory income.
In your case
You have installed solar panels to generate electricity and will receive credits for the electricity exported to the grid. These credits will be offset against your electricity bills and any excess credits will result in a payment to you from the electricity retailer. Taking into account the amount of equipment used to generate the electricity and the current pricing structure, there is no realistic prospect of profit from this activity. You produce the electricity for a domestic purpose only.
Any credits 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, therefore, are not included in your assessable income.