Small Business Energy Incentive

The government has announced a small business energy incentive which will allow eligible businesses to deduct an additional 20% of the expenditure incurred on eligible assets or improvements to existing assets for supporting electrification and more efficient energy use.

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus deduction being $20,000 per business.

The incentive, if it becomes law, will apply to eligible assets first used or installed ready for use for any purpose and a taxable purpose, or improvement costs incurred, between 1 July 2023 and 30 June 2024.

This incentive is not yet law.

A depreciating asset is eliglble for the bonus deduction if it:

  • uses electricity and there is a new reasonably comparable asset that uses a fossil fuel available in the market;
  • uses electricity and is more energy efficient than the asset it is replacing or, if it is not a replacement, a new reasonably comparable asset available in the market; or
  • is an energy storage, demand management or efficiency-improving asset.