David Richards and his family installed more than 500,000 lights at their Forrest home as part of annual fund-raising efforts, but their record-breaking display may have hit a snag following discussions with Territory and Municipal Services.

It comes after recent controversy around a government proposal to force charities and sporting clubs who hold fundraising barbecues to appoint food safety supervisors, at a cost of up to $150. It later announced charities and community groups would be exempt from the requirement.

Mr Richards met with TAMS representatives on Wednesday, when he was informed that he may be liable for costs associated with safety and traffic control. The costs, if they are imposed, would be taken out of funds raised for children's charity SIDS & Kids ACT.

"It'd be many thousands of dollars," Mr Richards said. "We certainly wouldn't like any donated money to be going to the ACT government."

Mr Richards said the potential fees came as a shock to the family, who have been installing the displays and garnering international attention without issue for years.

"I was quite surprised about it," he said.

No fees had been confirmed as of Wednesday.

Government guidelines published online state that displays may be classified as special events if they increase traffic in the area, affect noise levels or involve larger installations at one or more home.

If classified as a special event, organisers may have to undertake a formal assessment of risks, take out public risk insurance cover and contribute to payment for management costs.

Roads ACT director Tony Gill said the policy had been in place for several years to control the safety and traffic implications of larger events.

Mr Gill said the government was working with the Richards as one of two locations that fell into the special event category.

He said the government would look to absorb fees of up to $2000 but was proposing to share the costs if they went beyond that figure.

''There are costs associated with providing special arrangements,'' he said. ''Either those costs are borne by the event organiser or by the ACT government.''

Mr Gill said it was not a ''hard-nosed approach'' by the government, whose policy was similar to others in place across the country. ''At the end of the day, it's about consideration of public safety,'' he said.

Small-scale installations may also be reviewed if the government receives complaints.

The Christmas lights issue sparked uproar in the Legislative Assembly, with Liberal MLA Steve Doszpot describing the fee as a ''road tax''.

Liberal MLA Giulia Jones asked Territory and Municipal Services Minister and Greens MLA Shane Rattenbury, ''Has the green Grinch stolen Christmas?''

Mr Rattenbury said light displays were a great way to celebrate Christmas and boost community spirit.

But he said two displays had this year become so large that special traffic arrangements were needed.

''One can imagine a situation of a narrow suburban street in which many cars are turning up each night, there are excited young children running around between the cars and in some cases there are neighbours who do not appreciate the traffic inflow into their street,'' Mr Rattenbury said.

Other Christmas lights enthusiasts have welcomed the government's input, including Phil Jensen, who has been preparing his Kambah property for Christmas since October. His extravagant displays - this year there are 100,000 lights and three-metre-tall candy canes - have prompted past disputes with the ACT government, which forced Mr Jensen to take down online advertising in 2010.

He was told that if he did not comply, he would have to apply for a special event permit for his Bissenberger Crescent display.

But Mr Jensen said his relationship with the government had since been amicable as they worked together to organise traffic management.

''As of the 13th, the road will be one way,'' he said. ''The traffic is getting bigger and bigger, the government had to do something.''

with Peter Jean