The Federal Government has announced a Small Business Energy Incentive as part of the 2023-24 Federal Budget, which allows a business with an aggregated annual turnover of less than $50 million a 20% bonus deduction for expenditure that supports electrification and the more efficient use of energy.
The additional deduction will be available for eligible expenditure of up to $100,000 and is therefore capped at $20,000 for each business.
We note this is a proposal at this stage and has not been legislated yet. See below for a summary of the proposed criteria and eligibility.
Eligible expenditure
The eligible expenditure for this scheme will include a range of depreciating assets, as well as upgrades to existing assets which include upgrades to more efficient electrical goods such as:
- energy efficient fridges
- assets that support electrification (eg heat pumps and electric heating or cooling systems), and
- demand management assets (eg batteries or thermal energy storage).
A full list of eligibility criteria will be finalised in the consultation phase and communicated with stakeholders in due course.
Exclusions
Certain exclusions will apply, such as:
- electric vehicles
- renewable electricity generation assets
- capital works, and
- assets that are not connected to the electricity grid and use fossil fuels.
If you are planning to spend on electrification and the more efficient use of energy, consider conducting installations and upgrades to eligible assets in the 2023-24 income year to be able to avail of the $20,000 bonus tax deduction.
Any expenditure incurred in excess of the $100,000 cap may still be eligible for other tax deductions under small business depreciation rules.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.