Liable entities have a primary obligation to comply with the
Renewable Energy (Electricity) Act 2000 (REE Act) by
fully surrendering certificates. Payment of the non-tax deductible shortfall charge goes into consolidated revenue and does not contribute to the achievement of the 2020 large-scale renewable energy target. The Clean Energy Regulator publishes the details of all entities in shortfall.
There continues to be an adequate supply of certificates in the market for all entities to meet their obligations. Liable entities should plan well in advance of surrender deadlines to ensure that they hold enough certificates.
Liable entities may
carry forward less than 10 per cent of their surrender liability for a particular year without incurring a shortfall charge. This amount is added to their surrender liability for the following year.
Entities who have incurred a shortfall charge can subsequently surrender additional certificates and obtain a refund, less an administrative charge. It should be noted that a liable entity cannot claim a refund in a year if it has any shortfall for the previous year.
The Clean Energy Regulator encourages liable entities who are anticipating a shortfall of any amount in a particular year to advise us via
email at the earliest opportunity.
Under the REE Act, liable entities that pay a large-scale generation shortfall charge, resulting from a shortfall of surrender of large-scale generation certificates, may claim a refund for the shortfall charge (less an administration fee). To qualify for a refund, liable entities must surrender additional large-scale generation certificates in a future year to cover all or part of the amount for which they initially paid the shortfall charge.
A refund on the shortfall charge paid may only be claimed if:
Refunds are not available for small-scale technology certificate shortfall charges.
Refunds are only allowed during the ‘allowable refund period’. Assuming entities meet their annual lodgement dates and pay their shortfall on time, this period will generally be a two year window, commencing a year after the shortfall charge was incurred.
The allowable refund period starts the day after the liable entity lodges its large-scale generation shortfall statement (including a zero shortfall statement) for the year following the year for which the shortfall charge was incurred.
For example, if the shortfall charge that the refund is sought for applies to the 2016 assessment year, the allowable refund period would start on the day after the 2017 assessment year large-scale generation shortfall statement is lodged – generally by 14 February 2018.
The allowable refund period ends three years after the liable entity paid the shortfall charge. Where this day falls on a weekend or public holiday, the end date will become the next business day. For example, if the liable entity paid its 2016 shortfall on 9 February 2017, the allowable refund period will end on 10 February 2020.
A liable entity cannot claim a refund if it had a shortfall in relation to the year immediately before the year that the refund is claimed. The requirement to not have any shortfall means that a liable entity cannot claim a refund if it has carried forward less than 10 per cent of its shortfall for the year prior to the claim year.
For example, if, in 2018, a liable entity plans to claim a refund on its 2016 shortfall charge, it could only do so if it fully met its 2017 liability through the surrender of large-scale generation certificates. The liable entity would not be eligible to claim a refund if it carried forward less than 10 per cent of its 2017 liability, to 2018.
A liable entity that has met the eligibility requirements for claiming a refund can make the claim by surrendering additional large-scale generation certificates to clear all or part of the shortfall. The liable entity can then request a refund of that shortfall charge (less an administration fee).
As each liable entity’s circumstances are unique, we recommend that you seek independent advice. The examples below outline some potential ways that a liable entity could receive a refund of shortfall charges paid. These examples are illustrative only and do not reflect any actual liable entity.
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