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Shortfall and shortfall charges

17 July 2018
RET

Contents

Under the Renewable Energy Target, liable entities are required to surrender large-scale generation certificates (LGCs) and small-scale technology certificates (STCs) in proportion to the electricity they acquire in a year.

Liable entities that surrender less certificates than their required amounts for a particular year or quarter will be in shortfall. For LGCs, liable entities may carry forward less than 10 per cent of their liability for a particular year without incurring a shortfall charge. In all other circumstances where a liable entity does not surrender sufficient certificates, a non-tax deductible renewable energy shortfall charge of $65 per certificate not surrendered is applied.

Shortfall charges must be paid on time. Unpaid shortfall charges attract interest charges and are managed in accordance with the Clean Energy Regulator’s debt recovery policies and procedures.

The Clean Energy Regulator publishes the details of all entities in shortfall. A complete list of liable entities that have incurred LGC or STC shortfall in all assessment years is published on the certificate shortfall register.

Carrying forward large-scale generation shortfalls

A liable entity may carry forward a shortfall up to (but not including) 10 per cent of its required LGC surrender amount for a particular year. The large-scale generation shortfall charge does not apply in these circumstances. However, the amount of shortfall in certificates and percentage of liability is published, and the shortfall amount is added to its liability for the following year.

Carried forward shortfalls can accumulate over multiple assessment years, but once a liable entity has a LGC shortfall of 10 per cent or more of their total required large-scale renewable energy for an assessment year, the shortfall charge becomes payable.

Refunds for paid large-scale generation shortfall charges

Where a liable entity has paid a large-scale generation shortfall charge, it can utilise the refund provisions in certain circumstances.

Further details on the operation of the refund provisions is available at the refunds of large-scale generation shortfall charges page.

Small-scale technology shortfall charges

Under the Small-scale Renewable Energy Scheme, liable entities have quarterly surrender obligations. Liable entities that do not fully meet their required STC surrender amount for any quarter will have a small-scale technology shortfall in relation to that year.

The small-scale technology shortfall charge is $65 per STC not surrendered for each quarter of the year.

Small-scale technology shortfall cannot be carried forward to the next quarter or year, and no refund provisions are available for small-scale technology shortfall charges.

Invoices for small-scale technology shortfall charges are issued on 1 January in the REC Registry.

When shortfall charges become payable

Shortfall charges for an assessment year become payable by a liable entity under the Renewable Energy (Electricity) Act 2000 where the:

  • liable entity lodges a renewable energy shortfall statement for the year under section 47 or 48A,
    • if on or before 14 February – on 14 February
    • if after 14 February (and the Clean Energy Regulator has allowed an extension of time to lodge the energy acquisition statement and renewable energy shortfall statement) – on the day the statement is lodged.
  • Clean Energy Regulator makes a default assessment of a liable entity’s shortfall for an assessment year under section 48 or 48B liable entity’s (because the entity failed to lodge an energy acquisition statement and/or renewable energy shortfall statement for the year),
    • on the day on which shortfall charges related to the original assessment became payable.
  • Clean Energy Regulator amends an energy acquisition statement under section 45B,
    • on the day on which shortfall charges related to the original assessment became payable.
  • Clean Energy Regulator amends a notice of assessment under section 49,
    • on the day the amended assessment is made – if the amendment is wholly or partly as a result of an error of the Clean Energy Regulator, or
    • on the day on which shortfall charges related to the original assessment became payable.

Penalty charges

Penalty charges can be incurred where a liable entity has not met its obligations. Circumstances include:

  • failing to lodge a statement or information relevant to shortfall charges for a year.
    • Penalty charge = 2 x shortfall charge payable for the year ($130 per certificate not surrendered).
  • failing to keep or produce records detailing calculations of a certificate shortfall or surplus for a year.
    • Penalty charge = 2 x shortfall charge payable for the year ($130 per certificate not surrendered).
  • making false or misleading statements, or omitting information from a statement rendering it false or misleading, and the renewable energy shortfall charge properly payable by the entity exceeds the charge that would have been payable if it were assessed on the basis that the statement were not false or misleading.
    • Penalty charge = 2 x the excess ($130 per certificate).
  • making an arrangement solely or principally for the purpose of avoiding or reducing a shortfall charge.
    • Penalty charge = 2 x the amount avoided or reduced ($130 per certificate).

Interest charges

Interest applies to shortfall charges and penalty charges that are not paid by the due date. Interest is automatically applied to any large-scale generation shortfall charge, small-scale technology shortfall charge or penalty charge that is not paid by a liable entity by the due date for the charge. The principal amount and any applicable interest must be paid.

Interest is calculated daily by multiplying the unpaid amount by the general interest charge rate for the day (calculated under section 8AAD of the Taxation Administration Act 1953 and set out on the Australian Taxation Office’s website).​

Refunds for overpayment

Liable entities will be refunded any shortfall charge that has been paid and subsequently reduced by an amendment to an assessment, for example, to revise the liable entity’s reduced acquisitions for an assessment year. The amount to be refunded will be paid to the liable entity or applied to any existing liability of the liable entity to the Commonwealth. Refunds for overpayment can include the shortfall charge and any associated penalty or interest charges.

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