For many firms, prices rose when the carbon tax was introduced in 2012. With the tax gone, businesses should remove any carbon component from their prices and pass on any savings.
The Australian Competition and Consumer Commission (ACCC) has been given extra powers to make sure businesses pass on all benefits from the carbon tax repeal as quickly as possible.
Different businesses will be affected in different ways. Some businesses are regarded under the tax repeal legislation as ‘suppliers of regulated goods’ and face more substantial requirements than other firms.
Suppliers of regulated goods
In the wake of the carbon tax repeal, the busiest accountants are likely to be working for the quite small group of companies that supply ‘regulated goods’ – electricity, natural gas and synthetic greenhouse gases – under the tax repeal legislation.
The original carbon tax affected these regulated goods the most. If suppliers of regulated goods put their prices up due to the tax, these prices must drop on repeal.
Regulated suppliers are required to pass through all carbon tax costs savings. The ACCC formally monitors this to help make an assessment. If pass-through of cost savings does not occur, we will investigate and, if necessary, use our enforcement powers.
Accountants have played a role in assisting certain suppliers of regulated goods to substantiate their pricing to the ACCC. As required by law, this involved providing a carbon tax removal substantiation statement, as well as responding to a carbon tax removal substantiation notice issued by the ACCC. Further special requirements apply to electricity and gas retailers. They are also required to justify their prices directly to customers. You might have seen these ‘statements for customers’ appearing on invoices, bill inserts, letters and websites.
All other businesses must ensure accurate claims
While the remainder of Australia’s businesses don’t face these particular requirements, all businesses have to avoid making false or misleading claims about the effect of the carbon tax repeal. You must be honest with your customers about what price changes you have decided to make.
It works both ways. Businesses shouldn’t be misled by a supplier about the impact of the carbon tax or its repeal on prices. In turn, if your client has passed on any carbon tax related costs to customers, such as an increase in energy prices, the benefit of the savings should be passed on to customers.
For example, if a business states that it has passed through all carbon tax costs savings but an investigation reveals it has only partially passed through the savings, it may be liable for an infringement notice or court-imposed pecuniary penalties.
Penalties
Corporations can be fined up to $1.1 million and individuals $220,000 for breaches of the carbon tax price reduction obligation and false and misleading provisions.
And suppliers of regulated goods that don’t pass through all cost savings may also pay a penalty equal to 250 per cent of the savings that were not passed through.
Carbon price alert
Contact the ACCC at accc.gov.au/contact-us/contact-the-accc/carbon-complaint-form if you:
. think a price still includes a carbon cost; or
. see a claim about the carbon tax repeal that doesn’t seem right, having received an unsatisfactory response from the business.
