Removing the tax on refunds of large-scale generation certificate shortfall charges

On 13 September 2021, legislation removing tax on refunds of large-scale generation certificate (LGC) shortfall charges passed Parliament.

Under the Renewable Energy (Electricity) Act 2000, liable entities must surrender LGCs to meet their legal obligations or pay a non-deductible LGC shortfall charge. Liable entities which pay the shortfall charge may apply to have the LGC shortfall charge refunded if they surrender the outstanding certificates within the allowable refund period. The new law ensures that no tax is payable when companies receive a refund of their shortfall charge.

The new law also categorises LGC shortfall charge refunds as non-assessable non-exempt income for all refunds received after 1 January 2019.

For more information, visit the ATO website or contact PGIadvice@ato.gov.au.