Clean Energy Bill and related Bills pass Senate and await Royal Assent

On Tuesday 8 November 2011, the Senate voted on and passed into law the Clean Energy legislative package, which amongst other things, introduces a price on carbon from 1 July 2012. The fixed carbon price will transition to a flexible market price from 1 July 2015 under the emissions trading scheme.

The Institute issued a media release issued on 8 November 2011 entitled Charting the course of carbon for small business in response to the new Clean Energy legislation.

For further commentary on the issue, please see the Blog by Geraldine Magarey, the Institute’s Sustainability Manager.

From a tax perspective, businesses should ensure that they take advantage of all available grants or incentives on offer as part of the government’s clean energy plan, such as the $6,500 instant asset write off for small business available from 2012/13.

The new Research and Development tax incentive, applicable from 1 July 2011, will also complement the clean energy legislation by providing support for innovation in energy efficient processes and low-emissions technology, offering:

• a 45% refundable tax credit for small businesses with turnover less than $20 million, and
• a 40% tax credit for all other eligible businesses.

Businesses holding and dealing with carbon units under the carbon pricing scheme should be aware of the taxation treatment of carbon units. Broadly:

• New Division 420 of the Income Tax Assessment Act 1997 will introduce special income tax rules for 'registered carbon units' similar to the trading stock rolling balance method, but subject to the ‘no disadvantage’ rule for emissions-intensive trade-exposed (EITE) entities.
• The supply of 'eligible carbon units' will be GST-free under new section 38-590 of the A New Tax System (Goods and Services Tax) Act 1999. However, the normal GST rules will apply to financial derivatives over units.
  

Article last updated 14 November 2011