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GST explained
The Renewable Energy Certificates (RECs) assigned to Greenbank Environmental can attract GST, depending on a few factors.
RECs are generally owned by the OWNER of the property at the time of install, not the installer or supplier. The deal is between Greenbank and the owner. If a point of sale discount has been given by the installer or supplier, they are acting as the facilitator only. To find out more please visit the ATO website also please visit the REC Agents Association (RAA) website to read the briefing on GST paper.
How to treat GST on Environmental Certificates – For system suppliers
Background On 1 January 2011, the Renewable Energy Target (RET) scheme was divided into two parts:
- the Large-scale Renewable Energy Target for accredited power stations
- the Small-scale Renewable Energy scheme for the installation of solar water heaters and small generation units.
The Small-scale Renewable Energy scheme is to help with the upfront cost of purchasing eligible solar water heaters and small generation units (for example, photovoltaic systems) through supplying a right to create small-scale technology certificates (STCs).
Owners of installed eligible solar water heaters and small generation units can choose to assign their right to create STCs to a RET registered agent in exchange for either:
- A delayed cash payment or
- An 'upfront discount' on the purchase of the eligible system
Greenbank Environmental (GBE) is the largest independent environmental trader in Australia. GBE has developed long term relationships with governments, agencies, installers, utilities and financial institutions. When trading with GBE you will receive the highest level of service, a competitive price and prompt payment.
Invoicing system owners Regardless of whether the system owner (your customer) is registered for GST or not, you (system suppliers) must add the full 10% GST to the total price of the system, before any allowance is made for the environmental certificates.
It is permissible to offer the system owner an upfront reduction on their bill, in exchange for receiving the proceeds of the environmental certificates. Whilst this is commonly known as a ‘point of sale payment,’ it is important to understand that the ATO considers this merely another method of receiving payment – it is not a discount of any kind.
To ensure correct GST compliance you must treat the certificate value as a payment, and ensure that it does not reduce the GST amount on your invoice. We have come up with two options for you to choose from.
For further information The ATO has published a helpful fact sheet outlining these requirements. Whilst it deals exclusively with STCs, the principles remain the same regardless of the type of environmental certificate being created.
This fact sheet can be found here: REC agents | Australian Taxation Office (ato.gov.au) Should you have any further questions in relation to GST, please don’t hesitate to:
- Call us on 1300 GREENBANK (1300 473 362)
- Visit our website at www.green-bank.com.au
*Disclaimer: These notes are intended to be a guide only. GB Environmental Trading Pty Ltd, its directors, employees and consultants expressly disclaim any and all liability to any person for the consequences of anything done or omitted to be done by any such person relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances from a tax professional.