More trouble brewing for solar installers

Australian solar power companies that are not correctly charging goods and services tax (GST) could soon run into troubled water, according to industry experts.

A few solar companies have been charging GST on the amount paid by the customer and not on the total value of the product, said Ged McCarthy, Founder, Australian Renewable Energy Consumer Alliance. “That’s not the true amount as there is rebate (involved).” GST should be calculated on the entire price of the product before the rebate is applied. Rebates and discounts should be deducted from the total price, including GST.

Beyond Building Systems, an Australian solar energy company, that slipped into administration early this year reportedly owed $1m to the ATO. The company did not correctly charge for GST, according to media reports. The GST and the small-scale renewable energy scheme are explained here.

Some companies may be doing it unknowingly but some are doing it on purpose to sell products at a lesser price, said Alle Tesoriero, Marketing Director of solar power company SolarSwitch. This issue affects the whole industry, especially the genuine installers who are doing the right thing, notes Tesoriero. Tesoriero explains by citing an example - if Company X is selling a product worth $5000 and the rebate is around $3000, the company may charge GST on the net value (ie, $2000) instead of the total price of the product. This means that instead of paying GST on the total value of the product (ie, $5000), the company might just pay GST on the net value. This means a $300 price difference - it gives Company X an unfair advantage over its competitors.

According to the Clean Energy Council, there were a total of 4273 (Vic - 982; NSW and ACT - 1075; Qld - 1070; WA - 525; SA - 541; Tas - 60; NT - 20) accredited solar panel installers and designers in Australia as at September 2011. According to an industry source, the GST issue could affect around one-third of industry players. Australian solar installers that aren’t sure about whether they are charging the GST correctly should seek clarification from their accountant and/or seek external advice.

The solar industry is also facing a number of other challenges that could affect future growth. The Queensland government has announced changes to the Solar Bonus Scheme. From 10 July 2012, the Queensland feed-in tariff changed from 44 cents per kWh to 8 cents per kWh. The tariff will be reviewed by 1 July 2013 and is scheduled to end on 1 July 2014.