The Small Business Energy Incentive: What It Was and What Replaced It

If you are researching the Small Business Energy Incentive in the current tax year, the most useful thing to know first is that it has ended. This page explains what the incentive was, who could claim it, and how to treat it if you spent money during the eligible period, then points you to the small business tax breaks that are still open now.

What the Small Business Energy Incentive Was

Announced in the 2023-24 Federal Budget, the Small Business Energy Incentive gave eligible businesses a bonus 20% tax deduction for the cost of new assets, or improvements to existing assets, that supported more efficient use of energy. It was designed to help small businesses electrify and cut their energy bills. The bonus was separate from and additional to the ordinary deduction you would already claim for the asset.

What counted as eligible

To qualify, an asset had to be first used or installed ready for use, for a taxable purpose, during the bonus period, and you had to be able to deduct it under another provision of the tax law. Eligible items generally support more efficient energy use, such as upgrading to a more energy-efficient appliance, replacing a fossil-fuel asset with an electric one, or installing batteries or heat pumps.

If You Spent During the Bonus Period but Have Not Claimed

If your business incurred eligible expenditure between 1 July 2023 and 30 June 2024 and you did not claim the bonus deduction, you may be able to claim it by amending the relevant return. The ATO generally allows small businesses a two-year window to amend an assessment, so whether this is still open depends on when your 2023-24 assessment was issued. Because the eligibility conditions were specific, it is worth having the expenditure reviewed before lodging an amendment. Our registered tax agents in Adelaide can check whether a past purchase qualifies and lodge the amendment if it does.

Small Business Tax Breaks Still Available

The energy incentive has closed, but other small business concessions remain. If you are planning to invest in your business, these are the ones to look at now.

The $20,000 instant asset write-off

Eligible small businesses (aggregated turnover under $10 million) can immediately deduct the full cost of eligible assets costing up to $20,000 in the year the asset is first used or installed ready for use, rather than depreciating it over several years. Under current legislation, this applies through 30 June 2026. Energy-efficient equipment you might once have claimed under the energy incentive, such as a more efficient appliance or fit-out item under the threshold, may now simply be claimed under the instant asset write-off instead. Our small business tax deductions guide explains how the threshold applies to your business.

Ordinary depreciation for larger assets

Assets costing more than the instant asset write-off threshold are not lost; they are depreciated over their effective life under the normal small business depreciation rules, so you still claim the full cost over time. Energy-efficiency upgrades that no longer attract a bonus are still deductible in the ordinary way.

Energy bill relief and state programs

Separate from the tax system, government energy bill relief and various state-based programs have at times offered direct rebates or grants for small businesses, including for solar, lighting and equipment upgrades. These change regularly and are administered outside the ATO, so check the current offerings on business.gov.au for what is open in your state.

How The Kalculators Can Help

Whether you need to amend a 2023-24 return to claim a missed energy incentive, or you are planning new equipment spending and want to use the instant asset write-off correctly, our small business tax return service makes sure you claim everything you are entitled to, in the right year. If you want to plan capital spending around the available concessions, our business advisory services in Adelaide can help you time it.