Review of regulatory tax approach 2018

  • Accepting submissions
Post tax revenue model
Roll forward model
Date initiated: 
15 May 2018
Effective date: 
1 January 2019
General enquiries - Review of regulatory tax approach
AER reference: 


The AER invites interested stakeholders to participate in a review of our regulatory tax approach.

The estimate of expected tax payments is one component we consider when we set revenue allowances for regulated electricity and gas networks. These allowances are set using a ‘building block’ approach where revenue is expected to equal the total costs incurred by the regulated networks, including expected tax costs. The AER determines the expected cost of corporate tax in accordance with the relevant legislation—that is, the National Electricity Rules (NER) and National Gas Rules (NGR). It is an incentive framework, so the energy networks retain the benefit (or detriment) where costs are lower (or higher) than expected. Changing the approach to estimating tax for regulated energy networks will therefore change the total revenue allowance for these businesses.

Preliminary advice from the Australian Tax Office (ATO) identifies a number of drivers causing an apparent material discrepancy between the tax allowances set by the AER and the actual tax payments made to the ATO by the regulated networks.

The AER will investigate the difference between tax allowances and tax payments, including using its information gathering powers if necessary. The AER will examine these drivers and consider how they might be addressed. Options may include changes to how the AER regulates the tax aspects of its revenue determinations and/or changes to the NER and NGR.

We released an issues paper on 15 May 2018 to commence the review. The Hon Josh Frydenberg, Federal Minister for the Environment and Energy, has asked the AER to provide an initial public report in June 2018, and a final report and recommendations by December 2018.

Invitation for submissions

We invite stakeholders to make written submissions on our issues paper by 31 May 2018.

When reviewing our tax approach, it is important that we hear from all stakeholders—including networks, consumers and investors. We want to understand the different perspectives on this issue and the potential impact of any change in approach. We will follow the consultation procedures set out in the NER when considering changes to the regulatory models (PTRM and RFM).

Register your interest

Interested stakeholders can be notified of future developments as part of this review by subscribing to receive alerts. Stakeholders can also register their interest by sending an email to