For the 2024 financial year, there are opportunities to help your business become more energy efficient while maximising your tax deductions through the Small Business Energy Incentive.
If you operate a small business with aggregate annual turnover of less than $50 million, the incentive provides a bonus 20% tax deduction on expenditures for more energy efficient assets and supporting improvements.
Assets that would be eligible for the incentive must be both first used or installed ready for use for any purpose and used or installed ready for taxable purpose between 1 July 2023 through to 30 June 2024.
Your business would have up to $100,000 of total eligible expenditure for the incentive with a maximum of $20,000 in bonus tax deduction as calculated on the business related portion of the expenditure.
For depreciating assets to be eligible it must use electricity and meet at least one condition of being more energy efficient than the asset it replaces, if it is not a replacement then it must be more energy efficient than a new reasonably comparable asset in the market, and there is a new reasonably comparable asset that uses fossil fuel in the market. A depreciating asset may also be eligible if it is an energy storage, time-shifting or monitoring asset, or an asset that improves the energy efficiency of another asset.
In the case of improvements to depreciating assets, they may also be eligible for the bonus tax deduction if they either enable that asset to use electricity or energy derived from renewable source instead of fossil fuel, enable the asset to be more energy efficient, or facilitate the storage, time-shifting or usage of monitoring of electricity or other renewable energy source.
Come and have a chat with us if you have installed any of these assets so we can help you get the most out of your tax return this year.