This page covers the sale of STCs to a trader, which is the part installers ask about most. It is general information, not tax advice, and your accountant should confirm how it applies to your circumstances. The question of whether to charge GST in the first place is looked at from another angle in do I charge GST on STCs.
The basic position
An STC is a tradeable certificate. When a GST-registered business sells STCs to a trader, the sale is generally a taxable supply. That means GST at 10 per cent applies on top of the price, you include it in your BAS, and the trader usually claims it back as an input tax credit. If you are not registered for GST, there is no GST to add, though you still need an ABN to be paid.
Where the money flows
At the time of writing, STCs have been roughly $38 to $40 each, so a job earning 45 STCs creates a sale of around $1,700 to $1,800 before GST. GST on top is roughly $170 to $180. That GST is not extra margin. It belongs to the ATO, and sits in your account until the BAS.
The paperwork
Most traders pay by recipient created tax invoice, an RCTI, where the trader raises the invoice on your behalf under an agreement. That means you do not issue your own invoice for each sale, but you do need the agreement in place, a current ABN and the correct GST registration details on file. See recipient created tax invoice for STCs and our RCTI, GST and ABN guide.
The assignment from the homeowner
A related question is how the owner’s assignment of STCs to you is treated for GST. That is a different transaction, between you and the household, and it is worth taking advice on how it flows through your quotes and invoices.
Common problems
- An ABN that is wrong or cancelled, which holds up payment.
- GST registration status that does not match what is on file with the trader.
- Not setting money aside for the BAS.
From the desk: keep GST on certificate sales in its own line in your books. It stops it being spent as revenue.
What this means for installers
Get your ABN and GST status in order before the first claim, and set up the RCTI agreement with your trader. See how it works for where the invoice fits, and pricing for how rates are stated. The resources hub has more.