Small and medium-size businesses could get tax breaks of up to $20,000 for electrification and energy efficiency – slashing bills and potentially keeping a lid on the price of goods.
Treasurer Jim Chalmers has announced the Small Business Energy Incentive – to be included in next month’s budget – in a bid to help businesses manage the up front costs of changing their energy use.
Up to 3.8 million businesses across Australia could benefit from the measure.
Businesses with a turnover of up to $50 million will be able to electrify their cooling and heating, install batteries and heat pumps, as well invest in induction cooktops to replace gas.
The Property Council of Australia welcomed the move on Sunday, saying the costs of improving equipment are often a barrier to businesses wanting to reduce energy bills, even though the ongoing savings outweigh the initial outlay.
“Switching to more efficient appliances and upgrading from gas to highly efficient electric heating and cooling, hot water and cooking will reduce energy bills and emissions,” Property Council chief executive Mike Zorbas said.
The Energy Efficiency Council also welcomed the announcement that applies to expenditures of up to $100,000 made in the 2023/24 financial year.
“Driving down energy bills through improved energy performance means one less cost that has to be passed on to consumers – it’s a win-win,” council CEO Luke Menzel said.
Mr Menzel said the extra tax deduction could unlock around $1.5 billion in investment to improve Australia’s energy performance.
Rewiring Australia co-founder and chief scientist Dr Saul Griffith said the scheme would help permanently lower the cost of business.
“Swapping out fossil fuelled devices and energy sources for renewable-backed electrification is the fastest, most cost effective way to decarbonise our domestic economy,” he said.
The maximum bonus tax deduction is $20,000 per business, with $314m set aside over the next four years in the upcoming budget.
Dr Chalmers said small business will be front and centre in the federal budget on May 9.
“This incentive is all about helping small business save energy and save on their energy bills, support that comes on top of the direct energy bill relief for small businesses that will be a centrepiece of the budget,” he said.
Energy Minister Chris Bowen said small business knew about the options to upgrade their facilities, but had struggled with up front costs.
“The Small Business Energy Incentive unlocks that investment to help businesses save on their bills over the medium and long term,” he said.
Smart Energy Council chief executive John Grimes said the scheme came at the right time.
“Ensuring our small businesses can take part in the energy revolution means cheaper energy costs that can be passed on to customers,” he said.