Private ruling: GST and supply of small-scale technology certificate
Published: August 2013
Date scheme commenced: Not applicable

Ruling: Q1: What is the correct Goods and Services Tax (GST) treatment of supply of the right to create Small-scale Technology Certificates (STC) by the owners in relation to the sale and installation of solar panel systems? | A1: GST is not payable on the supply of STC by the owners in relation to the sale and installation of solar panel systems. Please refer to the reasons for decision.

Relevant facts and circumstances: · You carry on an enterprise of installing solar panel systems to customers. · You are registered for Goods and Services Tax (GST). · When you supply the solar systems to your customers, the customers assign their right to create small-scale technology certificates (STC) to another entity, a trading house, in exchange of an upfront discount on the purchase of the eligible system. · You calculate the cost/price in relation to the supply of solar systems to your customers including the value of the STC. · You advised us that the value of the STC is determined by the market price on the day of transaction and reduced slightly to cover the administration costs. · You are not registered with the Clean Energy Regulator as a registered agent. · You are a member of the Clean Energy Council which is the peak body representing Australia's clean energy sector and incorporated as a not-for profit association. · The owners of the solar systems assign their right to create STC by way of completing an assignment form. You advised us that you have arrangements with a number of trading houses to use their assignment forms. · The trading houses are registered with the Clean Energy Regulator and they make a payment to you of the value of STC calculated by you on receipt of the assignment form completed by the owners of the solar panel systems. · You provided a copy of an assignment form from one of the trading houses. Under the terms and conditions of this assignment form, it is an Assignment Agreement between the System owner and the trading house. · You believed that the STC is assigned to you and then you supply the STC to the trading houses as the quotation given to your customers indicates that the STC will be assigned to you. · You wish to know whether the transfer of STC to the trading houses will be a taxable supply and it includes GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 - Section 9-5.

Reasons for decision: Summary: You make a taxable supply if you satisfy all of the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Section 9-5 of the GST Act provides that you make a taxable supply 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. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. The supply of solar panel systems or the supply of the right to create small-scale technology certificates (STC) is not GST- free or input taxed. Small-scale renewable energy scheme The Small-scale Renewable Energy scheme was implemented 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 STC. Owners of the installed solar panel systems can assign their right to create STC to a Renewable Energy Target (RET) registered agent (trading house) in exchange for a delayed cash payment and/or an upfront discount on the purchase of the eligible system. Registered agents include retailers, installer or traders who have applied and paid a fee to the Clean Energy Regulator, so they can have STCs assigned to them by system owners such as householders. Registered agents take responsibility and ownership of the STC when the owners assign their STCs to them by signing an STC assignment form after the system has been installed. Supply of STC and GST A sale for GST purposes includes an assignment of a right. When the owners assign their right to create STC to a RET registered agent, it is considered that the owners are making a supply of right for GST purposes. If the supply of STC satisfies all of the requirements of section 9-5 of the GST Act, the supply will be a taxable supply and the sale price includes GST. However, if the assignment of the right to create STC is made by someone who is not registered or required to be registered for GST, then the assignment will not be subject to GST. In this case, the owners of the solar panel systems assign the STC by completing the assignment forms provided by the RET registered agents. You advised us that, you are not registered as a RET registered agent, therefore you have arrangements with the RET registered agents to use their assignment forms. When you supply the solar panel systems to your customers, they assign their right to create STC to a RET registered agent and you collect the assignment forms on behalf of the RET registered agents. You provide a discount to your customers equal to the value of the STC and the RET registered agent reimburses the amount of discount you have provided to your customers on submission of the assignment form. When the owners of the solar panel systems assign their right to create STC directly to the RET registered agent, they are making a supply of right to create the STC for GST purposes, as explained above. They are not making the supply of right to create the STC to you. Therefore, the ownership of the STC is held by the RET registered agent and not by you. The assignment form confirms that the parties involved in the supply of the right to create STC will be the system owner and the RET registered agent. The assignment form itself is an Agreement between the system owner and the RET registered agent. If the owners of the solar panel systems are registered or required to be registered for GST, then they will be making a taxable supply when they assign their right to create STC to the RET registered agent. And they are required to remit GST on the supply of the right to create STC. Based on the information provided, you do not acquire the right to create STC from your customers when you supply the solar systems. It is considered that you are collecting the assignment forms from your customers on behalf of the RET registered agents and receive the value of the STC from the RET registered agent. There is no supply made by you to the RET registered agent and the amount you received from the RET registered agent will not include the amount for GST. Therefore, you are not making a taxable supply when you submit the STC assignment forms to the RET registered agent as the right to create STC is assigned to the RET registered agent and not to you. The payments you receive from your customers and the RET registered agent would be the total consideration for the supply of solar panel system. Therefore, you are required to remit GST of one-eleventh on the total consideration received for the supply of the solar panel system. Additional Information Please note that there are two supplies being made which need to be examined and accounted for separately for GST purposes. The first supply is the supply of the installed solar systems to the customer. The supplier (retailer) is liable to remit GST of one-eleventh of the price of this supply. The GST liability is calculated before the reduction in price arising from the application of the payment made for the assignment of the right to create the STC as it is a separate transaction. The second supply is the supply by the customer (as explained above) of the assignment of the right to create STCs to the RET registered agent or a trading house. The consideration for this supply would be the amount of reduction in the price of the solar systems to the customer. It is therefore not possible to net off these supplies and apply GST to the net figure. Each transaction must be accounted for separately.