General Renewable Discussion, page-1893

Budget - benefits

Smal business write offs and convert to electric

Tom McIlroyPolitical correspondent

Millions of small businesses with turnover of up to $10 million will be able to write off the value of new equipment worth up to $20,000.

The threshold for write-offs on eligible assets had been due to drop to $1000 at the end of the financial year, but Tuesday’s federal budget increased the rate to $20,000, in a 12-month extension to June 30 next year.

The scheme is designed to help businesses bounce back from challenging economic conditions in the wake of the COVID-19 pandemic. Justin McManus

About 3.8 million businesses will benefit from the change, which will cost the budget $290 million over the four-year forward estimates.

The new rules replace former treasurer Josh Frydenberg’s $27 billion pandemic-era full expensing rules, which allowed companies with a turnover of up to $5 billion to instantly deduct the full cost of eligible capital assets.

That scheme was killed off in the budget in March last year. It had covered about 99 per cent of companies operating in Australia.

The new measure is matched with a small business energy incentive that will provide $310 million in tax relief and support for up to 3.8 million businesses to electrify heating and cooling systems, install batteries and upgrade to high-efficiency electrical goods.

The scheme is designed to help businesses bounce back from challenging economic conditions in the wake of the COVID-19 pandemic.

‘Significant’ practical measures

Businesses with annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy, from July 1 this year until June 30 next year.

Up to $100,000 of total expenditure will be eligible for the incentive, with the
maximum bonus tax deduction being $20,000 per business.

This is in addition to $62.6 million towards energy efficiency grants for small
and medium enterprises in the October budget.