Question: How can we best take advantage of solar produced electricity to contribute to the reserve fund without suffering from additional tax payable by the strata company?
Answer: Solar generation reduces (or supplements) the cost of electricity.
With the disclaimer that this is not accounting advice, solar generation reduces (or supplements) the cost of electricity, as a site does not need to purchase the volume of electricity generated onsite (by solar) from the grid.
Two scenarios apply:
- When solar electricity (i.e., all or a proportion thereof) is allocated to common areas usage, the common electricity charges are reduced for the scheme’s benefit as a saving if no charge is applied to the value of each kWh of solar electricity.
- Where a strata scheme is on selling electricity to occupants in accordance with regulatory tariffs (i.e., solar or grid electricity), it should derive an on-sell margin or profit that would flow into the revenue stream of the strata scheme as the lot owner is charged for the electricity at a tariff rate.
- From an accounting perspective, how the income is treated would be subject to site specifics and a question for the appointed accountant in accordance with tax law.
- Generally, where a profit is derived, it would be assumed the strata company will need to pay the relative tax.
We have plenty of information regarding this on our website:
This post appears in Strata News #683.
Damien Moran EnergyTec E: damien.moran@energy-tec.com.au P: 08 9382 7700