Small Business Energy Incentive

In a bid to foster sustainability and enhance energy efficiency within small businesses, the federal government has introduced a third significant boost, known as the Small Business Energy Incentive. This incentive, designed specifically for enterprises with an annual turnover of less than $50 million, aims to stimulate investments in electrification and the adoption of energy-efficient practices.

Key details of the incentive:

1. Financial Benefits: Small businesses stand to gain substantially from this initiative, with the opportunity to deduct an additional 20% of the expenditure incurred on eligible assets or improvements. This bonus deduction can potentially amount to $20,000 per business, providing a considerable financial incentive for participation.
2. Eligibility Criteria: To qualify for the bonus deduction, assets must meet specific criteria. For instance, eligible assets include those that utilise electricity and exhibit greater energy efficiency compared to fossil fuel-based alternatives or older models. Additionally, assets facilitating energy storage, time-shifting, or enhancing the efficiency of other assets are also eligible.
3. Exclusions: Certain assets are excluded from eligibility, such as those primarily designed for electricity generation (e.g., solar panels), motor vehicles, assets reliant on fossil fuels, capital works, and financing costs.
4. Timeline: The incentive, if enacted into law, will apply to eligible assets or upgrades first utilised or installed between July 1, 2023, and June 30, 2024. Small businesses can anticipate claiming this boost when preparing and lodging their 2024 income tax returns.

Examples of eligible expenditures:

• Replacement of gas heaters with electric reverse cycle air conditioners
• Substitution of diesel water pumps with electric water pumps
• Acquisition of more energy-efficient commercial appliances, such as refrigerators and coffee machines
• Installation of energy storage systems, time-shifting devices, or monitoring assets to improve overall energy efficiency

Incentive cap and limitations:

• Small businesses can enjoy the bonus deduction for eligible expenditures of up to $100,000, capped at $20,000 per business.
• Notably, the incentive does not encompass solar panels or electric vehicles.

Looking ahead

While the Small Business Energy Incentive holds promise for enhancing sustainability and operational efficiency, it is important to note that its implementation is pending legislation. Thus, businesses are advised to maintain appropriate documentation, including purchase receipts and energy efficiency comparisons, to substantiate eligibility for the boost.

In conclusion, the introduction of this incentive underscores the government's commitment to empowering small businesses to embrace eco-friendly practices and invest in a greener future. As developments unfold, stakeholders are encouraged to stay informed and remain proactive in leveraging opportunities for sustainable growth.

How can Brentnalls SA help?

If you would like to discuss this further, please contact Brentnalls SA. Our objective is to see you and your business thrive now and into the future.

Disclaimer

The information provided in this information sheet does not constitute advice. The information is of a general nature only and does not take into account your individual situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.