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Covered for Carbon Tax? – By Barry van Heerden – Partner

With 1 July 2012 being the due date for the implementation of carbon tax it may be necessary to consider the effect of this new tax on any contract you may have for the provision of services and/or products.

Even though carbon tax may not have a direct influence on your business, the indirect affect may be substantial in that the cost of raw carbon intensive materials and services will increase and if your contract does not allow you to pass these additional costs on you may be out of pocket as a result of the price on carbon.

It is therefore important to review your contract to determine whether it contains a clause allowing you to pass through any increase in costs as a result of the implementation of carbon tax.

This is specifically important for owners of commercial properties and parties to building contracts.

It is important to note that a standard clause in a contract that allows you to pass on any new tax may not be enough to allow you to pass on any increase in the price as a result of the carbon tax.  This is because there is some significant doubt whether the price on carbon tax is actually a “tax”.  It is commonly referred to as a tax but there appears to be considerable confusion whether this is the correct terminology.

It will be more important to have a change in law clause in your contract.  However, such a clause will only be relevant if the contract was entered into before the legislation to implement carbon tax was enacted.  The Clean Energy Act implemented carbon tax and was enacted on 19 November 2011.

Even though carbon tax will primarily only affect heavy industry, miners and electricity producers, it will also have an effect on commercial properties.

Landlords should also ensure their leases contain passing through clauses to enable them to pass on the increase in costs to the tenant.

Should you require any further advice in this regard or wish to have your contracts reviewed please contact our commercial department on 1800 621 071 or email

With three offices conveniently located at Robina, Coolangatta – Tweed Heads and Kingscliff , you can also visit an office near you.

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Jeff Garrett

Jeff Garrett

  • Legal Practice Director
  • Direct line: 07 5506 8201
  • Mobile: 0419 304 174