It’s easy to assume GST doesn’t apply to emissions units. The legislation has specific provisions which “zero rate” many supplies of emissions units so perhaps the natural presumption is, you don’t have to worry about GST whenever an emissions unit is involved.
That could be a costly mistake.
Some businesses receive emissions units as part payment for goods or services they supply as part of their business activity. This is a “barter” arrangement; goods or services are exchanged in return for other goods or services, rather than payments of money.
GST applies to barter arrangements just as it would if money were the payment method.
So, if you are a GST registered business and you supply goods or services to someone else who pays you with emissions units, you have to pay GST on the value of the emissions units you receive as payment in the same way you would had your customer paid you in cash. If you don’t you could incur penalties and interest not to mention the extra GST cost you probably didn’t factor in to your cash flows.
Barrister, Director and Consultant specialising in tax, family enterprise governance and succession, helping start ups and entrepreneurial enterprises grow safely and international expert on value added tax policy and implementation.