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The Australian Taxation Office (ATO) has released updated web guidance addressing the GST treatment of several key arrangements commonly encountered in the energy sector. The new guidance, released in December 2025, addresses three areas that have been the subject of ongoing industry enquiry and ATO compliance activity.

• Bundled Power Purchase Agreements (BPPAs); 
• Connection services – Gifted Assets; and
• Connection services – Agency arrangements (including Div 153-B).

Below, we summarise the key aspects of the new guidance and outline the practical implications for industry participants.

Commissioner’s View on GST treatment and attribution in BPPAs

(see full details)

Overview

1. The ATO has published guidance on BPPAs, consistent with the position previously communicated with MinterEllison and covered in the website article New ATO position on Bundled Power Purchase Agreements.

2. Specifically, the subset of power purchase agreements where a Generator ‘bundles’ the supply of green products (such as large-scale generation certificates) with the Contract for Difference (CfD), without receiving specific consideration for the green products in return.

3. As a preliminary point, the ATO’s guidance is based on specific private rulings issued on particular BPPA arrangements. The ATO acknowledges that there may be other types of BPPAs where the consideration for the green products is not received upfront. If the analysis of the agreement indicates separate consideration is payable, other than the entry into the CfD for the green products, the attribution of the GST payable on the supply of the green products may be different to what is described below.  The guidance requests that taxpayers further engage with the ATO on variations to BPPA arrangements.

4. The Commissioner’s position on the GST treatment of these standard BPPA arrangements can be summarised as follows:

Nature of the supplies

5. Under the BPPAs considered by the ATO, the:

a. Generator supplies:

i. a derivative when entering into the CfD; and

ii. green products (in return for non-monetary consideration from the Off-taker, being their entry into the CfD).

b. Off-taker supplies a corresponding derivative when they enter into the CfD.

6. The ATO considers the supply of the CfD is a derivative, and therefore an input-taxed financial supply, whilst the supply of green products is a taxable supply (where the Generator and Off-taker are located in Australia).

Attribution of GST

7. The attribution of the GST payable on the Generator’s taxable supply of green products is triggered in full, upfront, when the non-monetary consideration is received (being the initial entry into the CfD by the Off-taker).

8. Practically speaking, this means the Generator should issue a single tax invoice for the supply of all the green products expected to be transferred over the life of the BPPA upfront, and not include a GST component in any further invoices for either the CfD payments or the actual transfer of green products each month/period.

Valuation considerations

9. Valuing the CfD non-monetary consideration may be difficult. The ATO notes that you may choose to value the green products instead, although this may also be difficult given the quantum to be supplied over the contract period is unknown. When the parties are unrelated, the Generator may use a reasonable method that is agreed to with the Off-taker in determining the GST-inclusive market value of the green products, including valuation methodologies that are consistent with professional guidelines.

Limitations on claiming input tax credits under BPPAs

10. The ATO notes that an Off-taker generally has only 4 years after attribution to claim back any GST (as an input tax credit) on the supply of green products under the BPPA. This means that input tax credits may not be available for green products acquired more than 4 years after the BPPA was executed.

Recommendation

11. We recommend reviewing the GST treatment of any existing BPPA arrangements to ensure consistency with the ATO’s new guidance, and to confirm that the 4-year limitation period for claiming input tax credits will not adversely affect your position.

Connection Services – Gifted assets

(see full details)

Overview

12. The ATO has also published guidance on how GST applies to electricity connection services, with the aim of clarifying common misunderstandings observed during justified trust reviews.

13. In the course of providing electricity distribution services, Distributors are required to connect new Customers to the electricity network upon request from a Customer. For business Customers, there can be significant construction work required in order to connect the Customer’s business premises to the Distributor’s electricity grid network. While there are certain connection works that are required to be carried out by the Distributor for safety purposes, other works can be carried out / arranged by either the Distributor or the Customer, at the Customer’s discretion.

14. If the Customer chooses to arrange construction of the asset by a third party, notwithstanding that the Customer has incurred the cost for the construction of the relevant electricity assets required for the connection, the ownership of those assets is generally required by the relevant jurisdiction’s regulatory framework to be “gifted” to the Distributor for the purposes of safety and good asset management.

Implications for Distributors

15. Distributor may be liable for additional GST where they receive gifted assets from a Customer (in additional to monetary connection fees). The tax invoice issued by the Distributor should reflect both the monetary and non-monetary consideration (the gifted assets) received for the connection services.

Implications for Customers

16. GST-registered Customers may be liable for GST when they transfer gifted assets to a Distributor. The Distributor may request a tax invoice for the supply of the gifted assets made to them. The consideration for this supply will be the GST-inclusive value of the portion of the connection services for which no monetary consideration was provided.

Recommendation

17. Parties who transfer or receive gifted assets should ensure that GST has been properly accounted for on these transactions.

Connection Services – Agency arrangements

(see full details)

Overview

18. In most Australian jurisdictions, regulations ensure that electricity Customers have a contract governing a Distributor’s supply of network connection services with the relevant Distributor. These typically take the form of “deemed’ contract which automatically arise by law when a Customer takes a supply of electricity. These are in addition to the contracts entered by Customers with their nominated electricity Retailer.  Retailers often collect the connection services charges from the Customers on the Distributor’s behalf, as they have an existing billing arrangement with Customers.

19. From a GST perspective, the connection service is a supply made by the Distributor to the Customer – the Retailer is not making this supply, and is not liable for the associated GST. Rather, any GST included by the Retailer on their invoice to the Customer for the connection services should be passed on to the Distributor, and reported by the Distributor on their BAS.

20. Noting the administrative difficulties in implementing this in practice, subdivision 153-B of the GST Act can simplify the GST obligations for the Distributor and Retailer by allowing them to enter into an arrangement where the Distributor is treated as if they had made a supply of connection services to the Retailer, and the Retailer is treated as if they have made a supply of connection services to the Customer.

Recommendation

21. Distributors and Retailers seeking to rely on subdivision 153-B should ensure that a written agreement is in place to support the arrangement.

If you have any questions about how this new ATO guidance may affect your business, or require assistance reviewing your existing arrangements, please contact a member of our Energy or Tax team.