Maximise Your Tax Savings with the Small Business Energy Incentive

Could your business save money on taxes while becoming more energy-efficient?

If you’ve made any energy-saving upgrades between 1 July 2023 and 30 June 2024, you may be eligible for a valuable tax deduction through the Small Business Energy Incentive. This incentive could help you save on both your taxes and energy bills, putting more money back into your business.

What is the Small Business Energy Incentive?

The Small Business Energy Incentive offers a 20% tax deduction for small businesses that invest in energy-efficient upgrades.

This deduction is designed to reward businesses like yours for adopting greener practices. You can get a tax break while reducing your long-term energy costs by upgrading your lighting, purchasing energy-efficient appliances, or making other improvements.

Are you eligible?

To find out if you can claim this incentive, check if your business meets these key requirements:

1. Your business needs to have an annual turnover of less than $50 million. If you fit within this range, you’re already on track to qualify.
2. The incentive applies to assets or improvements that reduce energy consumption. Examples include:

• Replacing a gas heater with an electric air conditioner
• Upgrading to energy-efficient appliances
• Installing devices that help you use energy during off-peak times
• Switching from diesel engines to electric motors
• Adding a battery system to store electricity

1. The assets or improvements must be installed and used between 1 July 2023 and 30 June 2024. Check if your upgrades fall within this period.

You can claim up to $100,000 in eligible spending, with a maximum deduction of $20,000. Make sure to calculate your total costs to see how much you can claim.

What you can’t claim

While the Small Business Energy Incentive covers many energy-efficient investments, there are some restrictions to keep in mind. You can’t claim:

• Assets that rely on fossil fuels, like gas-powered equipment.
• Solar panels or assets primarily designed to generate electricity.
• Capital works, such as building extensions or major renovations.
• Motor vehicles and related expenses.
• Costs associated with software development pools.
• Financing expenses for your energy-efficient upgrades.

It’s important to be clear on what qualifies and what doesn’t. Double-check your purchases to ensure they meet the eligibility guidelines, so you don’t run into issues down the line.

How to claim the incentive

If you’re eligible and want to make sure you claim this incentive correctly, follow these steps:

1. Keep Detailed Records: Hold onto all receipts, invoices, and any other documentation that proves your eligible expenses. This will make the claiming process much easier and ensure you’re prepared if questions arise.
2. Compare Your Assets: When making your upgrades, it’s a good idea to document why you chose one asset over another. Showing that your choice was based on energy efficiency can help strengthen your claim.
3. Stay Updated: The Australian Taxation Office (ATO) may update its guidelines on the incentive. Keep an eye on their website to ensure you’re always in compliance with the latest rules and information.