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$20k Tax Deduction in 2024 for Going Green With The Small Business Energy Incentive

Want to pay less in taxes this year? 

This new energy incentive can help you reduce your taxable income by $20,000. 

What Is The Incentive 

The Small Business Energy Incentive is about to be passed in Parliament. 

Who it’s for

It’s a tax credit aimed at helping small and medium businesses move towards more efficient energy sources. 

How much can you save 

Your business can invest up to $100,000, and receive a tax deduction of up to $20,000.  This is not a cash refund, but a reduction to your taxable income for the 2024 income year.

When can you get the savings 

To get the tax credit, you have to invest in energy upgrades by 30th June 2024.

How To Get The Tax Credit 

To get The Small Business Energy Incentive, your business has to invest in assets that improve your energy efficiency. 

This applies to both buying new assets, and upgrading existing assets. 

Qualification Criteria 

There is no specific list of assets, but a series of eligibility criteria:

  1. you have to invest in an asset that uses only electricity, or a renewable energy source 
  2. this asset improves your energy efficiency, meaning –
    1. it  is more energy efficient than what it is replacing, 
    2. or it is more energy efficient than similar commercially available assets that use fossil fuel,
    3. or it improves the energy efficiency of another asset which runs on electricity  or renewable energy
  3. the expenses incurred must also qualify for a deduction under another provision of the tax law
  4. the asset must be installed and used between 1 July 2023 and 30 June 2024. 

Upgrades you can make to take advantage of The Small Business Energy Incentive

There are a wide range of items that qualify for these tax deductions.

  • Electrifying heating and cooling systems
  • Replacing gas cooktops with induction cooktops
  • Installing batteries and heat pumps
  • Replacing a gas heater with an electric reverse cycle air conditioner 
  • Replacing a refrigerator or coffee machine with a more energy efficient model (keep documentation to show the manufacturer’s electricity consumption information)
  • Installing a solar thermal hot water system 

Investments to avoid

However, some energy investments don’t qualify for this tax break.

  • Anything that uses a fossil fuel
  • Anything that is used to generate electricity (so solar panels don’t qualify)
  • Capital works, such as buildings and structural improvements
  • Motor vehicles (including hybrid and electric vehicles) and expenditure on motor vehicles
  • Assets allocated to a software development pool
  • Any financing costs, including interest

Save More On Your Taxes This Year 

Not sure of which investments are worth it for you, or how to claim this $20K on your taxes?

We can help you discover and get back every cent you’re entitled to through tax deductions. And we can show you the best time and way to make big investments into your business. 

Contact us for a free consultation

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