Contents

• Eligibility
• Additional certificate surrender
• Further information and guidance

Under the Renewable Energy (Electricity) Act (the Act) liable entities that pay a large-scale generation shortfall charge, resulting from a shortfall of surrender of LGCs, may claim a refund for the shortfall charge less an administration fee. Refunds are not available for small-scale technology certificate shortfall charges.

To qualify for a refund, liable entities must surrender additional LGCs to cover all or part of the amount of certificate shortfall for which they initially paid the shortfall charge.

A refund on a paid shortfall charge may only be claimed if:

• the liable entity lodged an energy acquisition statement and large-scale generation shortfall statement for the assessment year that the shortfall charge was incurred (charge year)
• the refund claim is made during the allowable refund period, and
• the liable entity did not have a large-scale generation shortfall in the year immediately before the year in which the refund is claimed.

On 13 September 2021, legislation removing tax on refunds of large-scale generation certificate (LGC) shortfall charges passed Parliament. The new law ensures that no tax is payable when companies receive a refund of their shortfall charge. The new law also categorises LGC shortfall charge refunds as non-assessable non-exempt income for all refunds received after 1 January 2019. For more information, visit the ATO website.

Eligibility

An EAS and LGC shortfall statement were lodged by the liable entity

Refunds can only be claimed for LGC shortfall charges that are incurred when a liable entity lodges an energy acquisition statement and renewable energy shortfall statement for the assessment year.

If a liable entity does not lodge a LGC shortfall statement for an assessment year, the agency will complete a default assessment of shortfall charges. In this scenario the liable entity would not be eligible for a refund, because they did not lodge a shortfall statement and begin the allowable refund period.

The allowable refund period

Refunds can only be claimed during the ‘allowable refund period’. The allowable refund period:

• Begins the day after the liable entity lodges its large-scale generation shortfall statement for the assessment year following the assessment year for which the shortfall charge was incurred.
• Ends 3 years after the liable entity paid the shortfall charge. Where this day falls on a weekend or public holiday, the end date becomes the next business day.

No LGC shortfall in the previous year

A liable entity can only claim a refund if it did not have any LGC shortfall, including carried forward shortfall, in the most recent energy acquisition statement that has been lodged or validated. For example, if, in the 2022 calendar year, a liable entity plans to claim a refund on its 2020 shortfall charge, it could only do so if it fully surrendered against its 2021 LGC liability.

Additional certificate surrender

A liable entity that has met the eligibility requirements for claiming a refund can make the claim by surrendering additional LGCs to clear all or part of the shortfall. The liable entity can then request a refund of that shortfall charge (less an administration fee).

A liable entity is not required to claim a refund for the total shortfall charge amount. A liable entity can make partial additional certificate surrenders toward a refund claim for the same assessment year, up to the full shortfall charge amount.

The vintage rule does not apply to LGCs surrendered for a refund claim.

Further information and guidance

Refund claims are lodged on the REC Registry. The liable entity must also send a letter nominating bank account details for the refund to be paid in to. This letter must be on company letter head signed by the CFO or equivalent.

The standard processing time for a refund claim is up to 6 weeks. Additional time may be required for more complex claims or where additional information is required.

The examples below outline some potential ways that a liable entity could claim a refund of paid shortfall charges. Please note, these examples are illustrative only and do not reflect every scenario. Please contact the RET Liability team for specific advice.

Scenario A – A liable entity claims a refund as soon as possible:

1. A liable entity is required to surrender LGCs for the 2020 assessment year. The liable entity only surrenders a portion of those LGCs, and lodges its EAS and large-scale generation shortfall statement on 14 February 2021.
2. The liable entity receives an invoice for payment of the shortfall charge. They pay the shortfall charge on 14 February 2021. Note, the allowable refund period for claiming a refund of the 2020 shortfall charge ends three years after this date – i.e. the last day they can claim the refund is 14 February 2024.
3. The liable entity lodges their EAS and surrenders against their total LGC liability for the 2021 assessment year, on 1 February 2022. The liable entity has no large-scale generation shortfall for the 2021 assessment year.
4. The liable entity requests to surrender LGCs to acquit the 2020 shortfall on 5 February 2022.

Is the liable entity eligible for a refund?

Yes. The liable entity is eligible for a refund of the shortfall charge paid for the 2020 assessment year, less an administration fee. The liable entity:

• lodged an energy acquisition statement and large-scale generation shortfall statement for the charge year
• claimed the refund within the allowable refund period
• did not have a large-scale generation shortfall charge for the most recently validated assessment year.

Scenario B – A liable entity has shortfall charges over multiple years.

1. A liable entity is required to surrender LGCs for the 2020 assessment year. The liable entity only surrenders a portion of those LGCs, and lodges its EAS and large-scale generation shortfall statement on 9 February 2021.
2. The liable entity receives an invoice for payment of the shortfall charge. They pay the shortfall charge on 9 February 2021. Note, the allowable refund period for claiming a refund of the 2020 shortfall charge ends 3 years after this date – i.e., the last day they can claim the refund is 9 February 2024.
3. The liable entity is required to surrender LGCs for the 2021 assessment year. It lodges its energy acquisition statement and surrenders the total amount of LGCs on 14 February 2022.
4. The agency amends the liable entity’s energy acquisition statement, and the liable entity does not surrender additional LGCs to acquit the amended difference. They receive an invoice for the payment of the shortfall charge on 30 June 2022. The liable entity pays the shortfall charges on 30 June 2022. Note, the allowable refund period ends 3 years after this date – i.e., the last day they could potentially claim a refund of the 2021 shortfall charge is 30 June 2025.
5. For the 2022 assessment year, the liable entity is required to surrender LGCs. It lodges its energy acquisition statement and surrenders the total amount of LGCs on 14 February 2023. It therefore has no large-scale generation shortfall for the 2022 assessment year.
6. The liable entity requests to surrender LGCs to acquit the 2020 and 2021 shortfall charges on 20 February 2023.

Is the liable entity eligible for a refund?

Yes. The liable entity is eligible for a refund of the shortfall charges paid for the 2020 and 2021 assessment years, less an administration fee. The liable entity:

• lodged energy acquisition statements and large-scale generation shortfall statements for the charge years
• claimed the refunds within the allowable refund periods
• did not have a large-scale generation shortfall charge for the most recently validated assessment year.