The Small Business Energy Incentive was first announced by the Treasurer Jim Chalmers in April this year and included as a 2023/24 FY federal budget measure.

Its aim is to address and curb rising energy costs and help businesses manage their bills, at a time when the Australian Energy Regulator (AER) reports that  “small business customers are facing increases of 14.7% to 28.9% depending on their region”.

The draft bill calls for up to 3.8 million small and medium-sized businesses with aggregated annual turnover of less than $50 million to be provided with access to a temporary bonus deduction. That amount would equal 20% of expenditure on eligible assets, or improvements to existing assets, that support electrification or a more efficient use of energy.

According to the Australian Government, the measure would help small businesses make investments like:

• electrifying their heating and cooling systems
• upgrading to more efficient fridges and induction cooktops
• installing batteries and heat pumps.

In real terms it means a bonus deduction would apply to the cost of eligible assets (and improvements) for up to $100,000 max, with the maximum bonus deduction being capped at $20,000.

How is my business entitled to the bonus deduction?

• expenditure must be eligible for a deduction under another provision of the tax law
• the asset must be in use or installed ready for use between 1 July 2023 and 30 June 2024
• improvement costs must be incurred between the same period of 1 July 2023 and 30 June 2024

What’s not included?

• Certain assets and improvements will not be eligible, including those that draw on fossil fuels

As any assets need to be installed and ready for use by 30 June 2024, it means that potential expenditure should be considered early in this new financial year.

Although the measure is not yet law, the closing date for consultation was in mid-July and Hall Browns will keep you updated on the progress of the legislation. In the meantime, contact us on 07 3831 1055 or [email protected] if you would like to discuss how this proposal could benefit your business.