May 2023

Small business energy incentive

One measure that will likely brighten the outlook for small businesses across Australia is the introduction of the Small Business Energy Incentive.

On 30 April 2023, the Australian government announced that small businesses (with an annual turnover of less than $50 million) will be provided with an additional 20% deduction on spending that supports electrification and more efficient use of energy.

This incentive helps ensure these businesses share in the benefits and opportunities of the energy transition that’s now underway, away from fossil fuels and towards decarbonisation. It aims to support investments that deliver ongoing power bill savings for businesses, while at the same time helping Australia lower emissions.

The measure can be used to 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.

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, with the measure expected to cost $314 million over the forward estimates.

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