Small Business Tax Credits for Investing in Energy-Efficient Equipment

The Australian Taxation Office (ATO) strives to unite up-and-coming businesses in lowering the country’s carbon emissions and making greener choices. 

It offers various financial and tax incentives, enabling investments into energy-efficient equipment to yield long-term benefits. Whether you’re a small business owner looking to adopt sustainable practices, seeking tax savings, or both, you’ll want to check this guide. 

2 Incentives for Investing in Energy Efficient Equipment

As of 2023, at least two energy-saving strategies are targeted towards small businesses that turnover less than $50 million annually. 

The incentives should encourage small businesses to opt for depreciating electric assets instead of gas or low-efficient heating and cooling systems. Let’s dive into them: 

Investment Boost

To get small businesses digitised, the ATO offers an extra 20% deduction on expenses paying for electric equipment. Eligible purchases include cyber security systems, portable payment machines, and cloud infrastructure. 

The technology investment boost applies to expenses between March 2022–June 2023. The ATO will cover total expenditures of $100,000 per fiscal year and cap financial returns at $20,000. 

Extended Tax Deductions

The recently announced Small Business Energy Incentive will provide an extra 20% deduction on purchasing or upgrading energy-efficient assets, like heat pumps, rechargeable batteries, and electric cooling systems. 

To claim this benefit, you must install and use these assets between 1st July 2023 and 30th June 2024. As of December 2023, this incentive isn’t yet the law. 

How Do You Claim the Incentives? 

You claim bonus tax deductions based on the income year you incurred it. For instance, if you’re eligible for the incentive in the 2023–24 tax year, you’d claim it in your lodge that year. 

The precise date depends on whether you’re an early, normal, or late balancer. Speak to a bookkeeper about how you’re categorised. 

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