Liable entities can comply with the
Renewable Energy (Electricity) Act 2000 (REE Act) by fully
For large-scale generation certificates (LGCs), 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 with a LGC shortfall of more than 10 per cent of their liability for a year incur a shortfall charge. Under certain circumstances, these entities can subsequently surrender additional certificates and obtain a refund of the shortfall charges previously paid, less an administrative fee.
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.
Under the REE 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. To qualify for a refund, liable entities must surrender additional LGCs in a future year 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:
Refunds are not available for small-scale technology certificate shortfall charges.
The Government has announced its intention to make legislative changes (through the 2019-20 Mid-Year Economic Fiscal Outlook) to clarify no tax is payable by liable entities who seek a refund of their LGC shortfall charge. This measure will apply to refunds relating to all LGC shortfall charges including those charges already paid. This change in tax legislation is expected to come into effect in 2020.
Refunds may only be claimed during the ‘allowable refund period’. This period will generally be a two year window, commencing a year after the shortfall charge was incurred, assuming entities meet their annual lodgement dates and pay their shortfall on time.
The allowable refund period starts the day after the liable entity lodges its large-scale generation shortfall statement (reporting no certificate shortfall) for the year following the year for which the shortfall charge was incurred.
For example, for a refund of 2016 assessment year shortfall charges, 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 can only claim a refund if it did not have any LGC shortfall, including carried forward shortfall, for the assessment year immediately before the year that the refund is sought.
For example, if, in the 2018 calendar year, 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 LGCs. 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.
The eligibility to claim a refund is dependent on whether the liable entity had a shortfall for the assessment year immediately prior to the year the certificates are being surrendered.
For example, if, in the 2018 calendar year, a liable entity plans to claim a refund on its 2016 shortfall charge, it could do so if it fully met its 2017 liability through the surrender of LGCs. If, in the 2019 calendar year, the liable entity lodges a shortfall statement for the 2018 assessment year it would be ineligible to claim a refund on any unclaimed shortfall charges for the 2016 assessment year. The liable entity would need to wait until the 2019 calendar year before it could be eligible.
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).
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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