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Australia Renewable Energy Tax Guide

Australian renewable energy tax incentives. The guide covers: the Small-scale Technology Certificates (the 'STCs') — the 'STCs' are the 'certificates' created under the 'Renewable Energy Target (the 'RET')' for the 'installation of the small-scale renewable energy systems' (the 'solar panels' up to 100kW, the 'solar water heaters', the 'heat pumps', the 'small wind systems', the 'small hydro systems'); the 'STCs' are the 'financial incentives' that 'reduce the upfront cost of the solar installation' — the 'STCs' are 'assigned' by the 'Clean Energy Regulator' and 'traded on the STC market'; the 'number of STCs' is calculated based on the 'system size', the 'installation zone', and the 'deeming period'; the 'STCs' are 'assessable income' for the 'business' if the 'STCs are sold by the business'; the Large-scale Generation Certificates (the 'LGCs') — the 'LGCs' are the 'certificates' for the 'generation of the renewable energy from the large-scale renewable energy power stations' (the 'wind farms', the 'solar farms', the 'hydro power stations', the 'biomass power stations'); the 'LGCs' are 'created' for 'each megawatt-hour (MWh) of the renewable energy generated'; the 'LGCs' are 'sold' to the 'liable entities' (the 'electricity retailers') to 'meet the Renewable Energy Target'; the 'sale of the LGCs' is the 'assessable income' for the 'energy generator'; the Australian Carbon Credit Units (the 'ACCUs') — the 'ACCUs' are the 'carbon credits' issued under the 'Carbon Credits (Carbon Farming Initiative) Act 2011'; the 'ACCUs' are 'generated' by the 'carbon farming projects' (the 'vegetation projects', the 'soil carbon projects', the 'savanna burning projects', the 'industrial projects'); the 'ACCUs' are 'sold' to the 'buyers' (the 'government' or the 'private buyers') at the 'carbon price' (approximately $30 to $50 per ACCU); the 'sale of the ACCUs' is the 'assessable income' for the 'project proponent'; the tax deductions for the renewable energy assets — the 'renewable energy assets' (the 'solar panels', the 'batteries', the 'inverters', the 'energy storage systems', the 'electric vehicle charging stations') are the 'depreciating assets' under the 'Division 40 of the ITAA 1997'; the 'business' can claim the 'instant asset write-off' for the 'renewable energy assets costing $20,000 or less' (under the 'temporary full expensing' or the 'instant asset write-off'); the 'small-scale solar PV systems' (the 'rooftop solar') for the 'business premises' are 'eligible for the immediate deduction' under the 'instant asset write-off' (if the 'cost is below the threshold'); the 'home solar system' (the 'solar panels on the residence') is NOT 'deductible' as the 'personal expense' (the 'home solar' is 'not deductible' for the 'owner-occupied home').

STCs & Solar Incentives

  • STCs for solar panels: The 'STCs' reduce the 'upfront cost of the solar installation'. The 'STCs are created by the Clean Energy Regulator'.
  • LGCs for large-scale: The 'LGCs' are 'created for each MWh of the renewable energy' from the 'solar farms' and the 'wind farms'.
  • Assessable income: The 'sale of the STCs and the LGCs' is the 'assessable income' for the 'business'.

For the carbon credits and the carbon farming tax, see our Primary Production Guide →.

ACCUs & Carbon Credits

  • ACCUs: The 'Australian Carbon Credit Units' are 'sold at $30 to $50 per ACCU'. The 'ACCUs' are 'generated by the carbon farming projects'.
  • Assessable income: The 'sale of the ACCUs' is the 'assessable income' for the 'project proponent'.

For the primary production and the farming tax, see our Primary Production Guide →.

Tax Deductions for Renewables

  • Instant asset write-off: The 'solar panels and the batteries for the business' are 'eligible for the instant asset write-off' if the 'cost is below the threshold'.
  • Business solar: The 'solar system for the business premises' is 'deductible' as the 'depreciating asset'.
  • Home solar: The 'solar system for the home' is NOT 'deductible' (the 'personal expense').

For the depreciating assets and the capital allowances, see our Depreciating Assets Guide →.

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