Mutuality principle – what does it mean?

The mutuality principle is a legal principle established by case law. It is based on the proposition that an organisation cannot derive income from itself.

The principle provides that where a number of persons contribute to a common fund created and controlled by them for a common purpose, any surplus arising from the use of that fund for the common purpose is not income.

The principle does not extend to include income that is derived from sources outside that group.

The Australian Energy Market Commission (AEMC) recently finalised a range of proposals that will change the way in which electricity can be supplied in ‘embedded networks’ – an electricity supply arrangement that is common in strata properties also known as bulk electricity purchase. In this article we set out the key proposed changes, timeframes, transition provisions and what this means for strata.