Claim your small business energy incentive

The small business energy incentive helps businesses save on their electricity bills by improving their energy efficiency.

Businesses with an aggregated annual turnover of less than $50 million can claim an additional 20% tax deduction for eligible spending that supports more efficient energy use. This will enable businesses to make investments like:

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

Up to $100,000 of assets and improvement costs can be claimed, with a maximum bonus deduction of $20,000 per business.

The energy incentive applies to eligible expenditure on assets between Monday 1 July 2023 and Sunday 30 June 2024 – known as ‘the bonus period’.

Eligible assets must have been:

• both first used or installed ready for use for any purpose
• used or installed ready for use for a taxable purpose.

You must have incurred the eligible improvement costs during the bonus period to be eligible for the bonus deduction.

There are certain assets and improvements that are not eligible for the bonus deduction, including assets or improvements that can use a fossil fuel. For more information on the small business energy incentive visit the ATO’s Energise your business page.

$20,000 instant asset write-off

The instant asset write-off is now law. Eligible businesses with an aggregated annual turnover of less than $10 million may be able to deduct the full cost of eligible assets which cost less than $20,000.

Eligible assets can be both new or second-hand, they must be first used or installed ready for use between Monday 1 July 2023 and Sunday 30 June 2024. The $20,000 threshold will apply on a per asset basis, so you can instantly write off multiple assets.

The instant asset write-off is one of several depreciation methods available to small businesses. It has been offered under changing conditions since 2011, however was suspended when temporary full expensing was available. Temporary full expensing ended Friday 30 June 2023.

The usual rules for claiming deductions still apply. You can only claim the business portion of the expense and you need to make sure you have records to prove it.

For more information about the instant asset write-off, including eligibility criteria, visit the ATO’s Instant asset write-off for eligible businesses page.