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Tuesday, 10 August 2004
Page: 26054


Senator Brown asked the Minister representing the Treasurer, upon notice, on 23 June 2004:

(1) Are domestic generators of electricity that are connected to the grid charged the goods and services tax (GST) on their total consumption of electricity rather than their net consumption (that is, excluding the quantity that they have generated themselves).

(2) Does the above situation apply to all generators.

(3) What is the justification for charging GST on electricity generated and consumed on the same premises.

(4) In what other situations would consumption of a good or service created or provided by the person or organisation consuming it attract the GST.

(5) What action will the Treasurer take to remove this impost.


Senator Minchin (Minister for Finance and Administration) —The Treasurer has provided the following answer to the honourable senator's question:

(1) (2) and (3) This depends on the terms of the contract between the parties and on the meters monitoring the flow of electricity between them. It may be that there are two separate supplies: one being electricity supplied by the domestic generator and one being the electricity supplied by the retailer. Whether GST is payable on the supply by the domestic generator depends on whether the domestic generator is registered for GST. Generally, most domestic generators will not be registered for GST and therefore their supply of electricity back to the retailer will not be subject to GST. In respect to the retailer's electricity supply to the domestic generator, this will be a taxable supply and subject to GST. However, I am informed by the ATO that, in practice, there may be meters installed on the domestic generator's premises that do not measure the two supplies separately. That is, the meter can only measure the net flow of electricity supplied (i.e. the electricity supplied to the domestic generator less the electricity they supply back). In such cases, therefore, the ATO allows the retailers to account/charge for GST on this net value. In other cases where meters are installed that can measure the separate supplies, the ATO would expect GST to be calculated/charged on the total value supplied by the retailer.

(4) Supplies that an entity makes to itself are outside the scope of the GST. For GST purposes, only supplies made to another entity are considered.

(5) The Government has no plans to change the GST treatment applying to the supply of electricity.