#18325
Sir Humphrey
Strataguru

    …3) But the ATO regards that as non-mutual income, which must be (nominally) allocated out to each lot, and each lot has to report that in their individual income tax returns rather than the OC reporing it in theirs. Does the SM know they’ll have to issue 36 group certificates? Do the 36 owners know they’ll have to include this income? Note, there has been a suggestion that the ATO change this ruling, but who knows if/when that will happen … PeterC, how big is your scheme that used to consume 6MWH/qtr? Sounds very big.

     

    Yes, the ATO regards a gross feed in tariff as non-mutual income because it is not linked to actual consumption (even if it is less than your actual consumption). On the other hand a net tariff may not be regarded that way because you would be using what you make (in effect) and consequently saving money to the extent that you do not have to purchase power-that is not income. These days a PV system can give a reasonable return on investment if used on a net tariff. IE the return is there if benchmarked against the retail price of electricity. 

    The matter of issuing group certificates etc is correct if the PV system is regarded as part of the common property and the strata legislation says that common property is held by the owners corporation as agent for the individual owners and the income is assessable and non-mutual. However, the ATO ruled in our case that the OC could pass a resolution to hold the PV system as property in trust for the owners. Then the non-mutual income (we get a gross tariff) could be assessed once in the hands of the OC at the 30% corporate rate that OCs typically only have to pay on interest from the bank. Note that was before this was made explicit in the ACT Unit Title (management) Act 2011. It was made clear in the UTMA because I provided our ruling to the Review of the Act. So, I think the same is likely to apply in other states. You could similarly resolve to hold a PV system in trust for the owners, but you should get a private ruling from the ATO to be sure. 

    Our OC is 105 townhouse units on 11.4Ha. Our electricity consumption is almost entirely for lighting paths and parking areas. Our 6MWh/quarter (yes, correct, ~26MWh/yr actually) reduced to 13MWh/year following systematic replacement of globes with more efficient ones. Our 9.2KW PV system puts as much into the grid by day as we take out at night to run our lights.