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

17 December 2019

The Government has announced its intention to make legislative changes (through the 2019-20 Mid-Year Economic Fiscal Outlook) to clarify no tax is payable by liable entities who seek a refund of their LGC shortfall charge. This measure will apply to refunds relating to all LGC shortfall charges including those charges already paid.

The Clean Energy Regulator has previously clarified it has no objection to the use of paid shortfall where liable entities intend to true up their position by surrendering sufficient LGCs within the eligible three year period. The use of shortfall is a commercial decision that allows liable entities to shift demand and take advantage of lower forward LGC prices in times of tight liquidity.

This change in tax legislation is expected to come into effect in 2020.

Please see the measure “Corporate Taxation — removing the tax on refunds of large-scale generation certificate shortfall charges” on page 169 for full details. Please contact the Australian Taxation Office at PGIAdvice@ato.gov.au for further queries on the tax implications of shortfall refunds.

If you are considering claiming a shortfall charge refund (in part or in full), visit the Refunds of large-scale generation shortfall charges page on our website, or contact us to discuss the process for lodging a claim.



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