ATO Interpretative Decision

ATO ID 2002/627

Income Tax

Income - Photovoltaic Rebate
FOI status: may be released

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is a rebate received under the Commonwealth Photovoltaic Rebate Program, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The rebate received under the Commonwealth Photovoltaic Rebate Program is not assessable income under section 6-5 of the ITAA 1997.

Facts

The taxpayer, an individual, installed a Small Grid Interactive Renewable Generator (SGIRG) at their home.

A rebate towards the cost of acquiring and installing the system was received by the taxpayer from the Commonwealth Government under the Commonwealth Photovoltaic Rebate Program. The rebate was deducted from the cost of the system by the supplier of the system.

The photovoltaic system was installed to help reduce greenhouse emissions and to minimise the taxpayer's domestic electricity bills.

The system was installed by the taxpayer for domestic and private reasons; the taxpayer is not in the business of producing electricity and did not enter into the arrangement for the purpose of making a profit.

Reasons for Decision

The issue in this case is whether the rebate received by the taxpayer, on the installation of a SGIRG at the taxpayer's residence, constitutes income.

Income, or more specifically assessable income, is divided into two categories:

(i): ordinary income (being income according to ordinary concepts); and
(ii): statutory income (being amounts made assessable under specific provisions of the ITAA 1997 or the Income Tax Assessment Act 1936).

As there are no specific provisions within the income tax legislation regarding payments under the Commonwealth Photovoltaic Rebate Program, it is only necessary to consider if the payment is income according to ordinary concepts.

In this instance the taxpayer is not in the business of producing and or selling electricity. As the transaction is clearly a non-commercial or domestic transaction, the rebate is not income according to ordinary concepts.

Thus the rebate is not assessable income in the hands of the taxpayer.

Date of decision: 28 March 2002

Year of income: Year ending 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
section 6-5
section 6-10

Keywords
Income
Solar energy equipment
Government grants income

Siebel/TDMS Reference Number: DW403431

Business Line: Small Business/Individual Taxpayers

Date of publication: 31 May 2002

ISSN: 1445-2782

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