Treasurer Jim Chalmers has confirmed plans to introduce the Small Business Energy Incentive which will see small and medium enterprises (SMEs) rewarded with up to $20,000 in tax breaks for electrification and energy efficiency efforts. This tax incentive is set to be part of the upcoming budget and is expected to benefit as many as 3.8 million businesses across the country.
This tax break will be available to businesses with a turnover of up to $50 million and is expected to cost the government $314 million. The maximum bonus tax deduction will be $20,000. It will only be applied to eligible assets or upgrades made between July 1, 2023, and June 30, 2024.
Qualifying businesses that make the switch to electricity will be able to take advantage of the 20% deduction for investments made in the more efficient use of energy. This includes spending on the electrifying of heating and cooling systems, the installation of solar panels, batteries and heat pumps, and upgrades made to electrical appliances like induction cooktops and refrigerators. The goal of the change is to see more businesses adopt the use of cleaner energy sources and reduce their carbon footprint.
During his announcement alongside Small Business Minister Jenny McAllister and Energy and Climate Change Minister Chris Bowen, Treasurer Chalmers asserted that the move would be helpful to many in the small business sector, including tradies, restaurants, hairdressers, manufacturers, real estate agents, and more. He said that with the initiative these businesses would share in the benefits and opportunities of the ongoing energy transition. Bowen also acknowledged the prohibitive capital cost of installing energy-efficient measures and lauded the tax incentive as a means to help businesses save on their energy bills in the medium to long term.
The Property Council of Australia has warmly welcomed the announcement, stating that the costs associated with improving equipment were a common barrier that many businesses faced when wanting to reduce their energy bills. Property Council CEO, Mike Zorbas, added that making the switch to more energy-efficient appliances and upgrading to electricity for heating, cooling, cooking and hot water needs would help reduce energy bills and emissions.
The Energy Efficiency Council also approved the initiative, with its CEO, Luke Menzel, noting that it would bring down the energy bills thanks to improved energy performance. This would also mean less cost being passed on to consumers. Menzel said that he expected the tax incentive to unlock about $1.5 billion in investment that would help improve the country’s energy performance.
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