Some solar companies try to tempt their customers by showing lower prices. These companies deliberately miscalculate the GST amount, which is wrong. The issue is explained in detail below.
Some dishonest solar companies calculate GST the wrong way.
Let’s take an example.
The right way of Calculation
If the cost of panels, inverters, and installation is say $ 6000. Then after adding ($600)GST, it would be $6600. Now subtract the total STC (rebate) for this example let’s assume $2000. Now Net total would be $6600 – $2000 = $4600.
The Wrong way of Calculation
If the cost of panels, inverters, and installation is say $ 6000. They then subtract the total STC (rebate), which is $2000 in this example. Now total amount after subtracting is $6000-$2000 = $4000. They now add GST on this amount, which would be $400, and the total would be $4000+$400 = $4400.
The difference amount of $200 is straight away going into their pockets.
Now you can see how much additional profit dishonst solar companies are making by not declaring the right amount of GST. This is a simple example of just one installation.
Another downside is, the ATO and the Australian society is losing a lot of revenue via this trick. These solar companies are also kicking the quality solar installers out of their businesses as it is challenging for them to compete with such low prices.
What can be done?
The tax office needs to audit proactively to educate the whole industry of their obligations to make sure the installation companies comply with the Australian taxation laws.
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