Flick to electricity for 20% tax deduction, small business told
Tradies, manufacturers and restaurants to get a budget bonus for moving away from gas or for upgrading appliances.
Small business will get a tax incentive to flick the switch to electricity in next week’s budget with a 20 per cent deduction for spending on “more efficient use of energy”.
“It will help small businesses tradies, manufacturers, restaurants, hairdressers, real estate agents and other small businesses [that] are the backbone of communities across Australia,” Treasurer Jim Chalmers said in a joint release with Energy and Climate Change Minister Chris Bowen and Small Business Minister Senator Jenny McAllister.
“This incentive helps ensure these businesses share in the benefits and opportunities of the energy transition that’s now underway.
For businesses with a turnover below $50 million, up to $100,000 of total expenditure would be eligible for the incentive with a maximum bonus tax deduction of $20,000 per business.
Eligible assets or upgrades would need to be first used or installed ready for use between 1 July 2023 and 30 June 2024, and the measure is expected to cost $314 million over the forward estimates.
“The incentive has been specially timed to help small businesses lay the foundations for their future growth and position them to bounce back after a challenging period for the economy,” the government said.
Electrification proponent Rewiring Australia welcomed the move to replace gas power with electricity and improve the efficiency of electrically powered equipment.
Co-founder and chief scientist Dr Saul Griffith said the incentive would lock in years of benefit for those who seized the opportunity.
“The federal government promised a ‘meaningful and substantial’ package of electrification measures in the federal budget and this announcement is the first part,” he said.
“Swapping out fossil-fuelled devices and energy sources for renewable-backed electrification is the fastest, most cost-effective way to decarbonise our domestic economy. It embeds thousands of dollars’ worth of annual savings into the annual operations of small businesses, savings that accrue over the long term.
“Once a business has switched to solar-backed electrification, they never look back. Switching to rooftop solar and electric devices gives businesses certainty. They know their operating costs won’t suddenly surge due to something beyond their control.”
“Rewiring Australia’s research has shown there are tens of billions of dollars wasted every year in the Australian economy on expensive and inefficient fossil fuels.
“Electrification is the climate policy that immediately delivers for the economy. We look forward to working closely with the Government to assist with implementation of this package.”
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