Payments for electricity generated from solar panels

Will you be taxed for selling solar-panel generated electricity back to the grid?

More and more homeowners are installing solar panel systems in their homes.  In some cases, the solar panel system may produce more electricity than they consume.  If this is the case, the homeowner can often “sell” the excess electricity back to their electricity company, which will be released into the electricity grid.

This obviously begs the question: will the payments they receive from the electricity company be included in their assessable income?

The ATO has basically confirmed that, in typical situations where payments are received from electricity retailers by homeowners for the power generated by their solar panels that is exported to the grid, the payments would generally not be classed as assessable income, as they would be private or domestic in nature.  This conclusion takes into account the amount of equipment used to generate the electricity, the current pricing structure, and the fact the homeowner produces the electricity for a domestic purpose only.

In addition, since the payments are not assessable income and are private or domestic in nature, a homeowner in the above situation would not be able to claim a deduction for the costs associated with the solar system, such as interest and depreciation.

Note, however, that if the characteristics of the activity change (including the motivation for undertaking that activity, how the activity is undertaken and whether there is a real prospect of profit from the activity), the receipts or credits from the activity may become assessable income.

Can I play music at my premises?

A lot of small businesses play radio or some other music in their premises. This is quite prevalent especially in retail stores. Did you know however that you generally need permission to play recorded music in your shop or your business, even if you have already purchased the CD?

It’s a little complicated, but when you purchase a CD you don’t actually purchase the rights to the music – you purchase the right to play the music for private, or domestic purposes. If you want to play the music to the public, then you must get permission from the owners of the music to do so. The courts have even considered that playing music over the telephone while people are waiting on hold can be considered playing music to the public.

If you want to play music in your business or your shop, you will likely need permission, or a license, from the Australasian Performing Rights Association (ARPA) and from the Phonographic Performance Company of Australia (PPCA). These are non-profit organisations who work for their members, who are the owners of the music. They collect money from granting licenses and distribute the collected income to their members.

Of course, this is not an issue if the music is something that you’ve composed and performed yourself, or you’ve already obtained permission from the person (or people) who composed and performed the music.

This is also not an issue if copyright has expired over the music, but this can often be misleading. For example, while copyright has expired over Beethoven’s works, copyright protects the recording of the orchestra performing Beethoven’s works. If this is the case then you’ll still need licenses.

If you fail to obtain the relevant permissions then you could face the long arm of the law – either ARPA or PPCA might send you some letters seeking that you stop this behaviour or even worse, take out actions against you in a court of law.

Long story short – if you’re playing music in your business or at your store, then you should get the proper permission! If you’re still confused about what you need to do, drop us a call or send us an enquiry using the quick contact form.