Considering the taxation implications of Australia’s carbon pricing mechanism

Abstract

With the commencement of the carbon price on 1 July 2012, new Division 420 operates with respect to transactions involving Registered Emissions Units. Although the carbon price will initially only apply to approximately 500 entities based on Government estimates, Division 420 also covers units issued under the Carbon Farming Initiative and, once trading in Australian carbon units commences in 2015, investors will also be subject to these rules. This article provides an analysis of the new provisions and highlights practical aspects of their operation in light of the features of the carbon pricing mechanism and the industry assistance measures provided under the Clean Energy Plan.