Energy opportunities for businesses in the FY20/21 budget

The FY20/21 Federal Budget, announced in October 2020, offers a number of energy opportunities for businesses. In particular, businesses grappling with the economic fallout from the COVID-19 pandemic are exploring opportunities to leverage expanded and new tax incentives from the Federal Government for energy management upgrades.

The Federal Government has expanded the instant asset write-off tax incentive and implemented new, time-limited immediate expensing provisions to encourage capital investment. Using the instant asset-write off for efficient equipment means that businesses' tax savings can be added to the energy cost savings, amplifying the financial benefits of the energy upgrades

In the midst of the COVID-19 pandemic the threshold for the instant asset write-off was increased five-fold to $150,000, which, following the FY20/21 Federal Budget announcement, was substantially extended.

In addition, as announced in the FY20/21 Federal Budget in October 2020, from 6 October until 30 June 2022 businesses with a turnover of up to $5 billion will be able to:

• Immediately deduct the full cost of a new, eligible asset installed or ready for use by 30 June 2022, with no limit on asset value;

• Immediately deduct the full cost of improvements made to existing depreciable assets by 30 June 2022.

In addition, SMEs with a turnover up to $50 million will be able to immediately deduct the cost of all second-hand assets installed or ready for use by 30 June 2022.

These measures provide a significant incentive for investing in energy productivity enhancing equipment.

For up-to-date information regarding thresholds and other information on tax incentives visit ato.gov.au

Click here to return to the tax incentives 101 page.