Small business energy incentive
The Treasury Laws Amendment (Support for Small Business Charities, and other Measures) Act 2024External Link provides businesses with an aggregated annual turnover of less than $50 million with access to a temporary bonus deduction equal to 20% of the cost of eligible assets or improvements to existing assets that support more efficient energy use.
Amount of the energy incentive bonus deduction
The bonus deduction applies to the cost of eligible assets and improvements up to a maximum amount of $100,000, with the maximum bonus deduction being $20,000.
The bonus deduction is separate and additional to other deductions you would ordinarily claim under tax law.
Enter the amount claimed by the CCIV sub-fund for the small business energy incentive bonus deduction at this label. Don't include the total energy incentive expenditure amount at this label for which you claim an ordinary deduction.
Criteria for claiming the bonus deduction
You must meet the following criteria for the bonus deduction:
- Your business needs to meet the aggregated annual turnover rules (with an increased 50 million threshold).
- The expenditure being claimed must be deductible to your business under other provisions in the tax law.
- For expenditure on eligible assets, the asset must be both first used or installed ready for use for any purpose and used or installed ready for use for a taxable purpose, between 1 July 2023 and 30 June 2024.
- For expenditure on improvements to existing assets, the expenditure must be incurred between 1 July 2023 and 30 June 2024.
- Neither the expenditure nor the asset is excluded.
You can't claim the bonus deduction for the cost of an eligible asset, or an improvement to an existing asset, if a balancing adjustment event occurs to the asset (for example, you sell it) during the income year in which you hold the asset and incur the expenditure, unless the balancing adjustment event is an involuntary disposal.
You calculate the bonus deduction as 20% of the cost of the eligible asset or improvement, irrespective of whether your ordinary deduction for the decline in value of the asset is claimed in one income year (under instant asset write off) or over its effective life.
Eligible assets
A depreciating asset may be eligible for the bonus deduction if it uses electricity and when one or more of the following apply:
- there is a new reasonably comparable asset that uses a fossil fuel available in the market
- the asset is more energy efficient than the asset it is replacing
- if it is not a replacement, it is more energy efficient than a new reasonably comparable asset available in the market
- a depreciating asset may also be eligible if it is an energy storage, time-shifting or monitoring asset, or an asset that improves the energy efficiency of another asset.
Eligible improvements
An improvement to a depreciating asset may be eligible for the bonus deduction if it:
- enables the asset to only use electricity, or energy that is generated from a renewable source, instead of a fossil fuel
- enables the asset to be more energy efficient, provided that asset only uses electricity, or energy generated from a renewable source
- facilitates the storage, time-shifting or usage monitoring of electricity, or energy generated from a renewable source (for example, a battery that stores electricity).
Excluded assets and expenditure
The following types of assets and expenditure are not eligible for the bonus deduction:
- assets and expenditure on assets that can use a fossil fuel (except if that use is merely incidental such as where an asset uses an oil-based lubricant)
- assets and expenditure on assets which have the sole or predominant purpose of generating electricity (such as solar panels)
- capital works
- motor vehicles (including hybrid and electric vehicles) and expenditure on motor vehicles
- assets and expenditure on assets allocated to software development pools
- financing costs, including interest and borrowing expenses.
When the bonus deduction is claimed
For eligible expenditure on depreciating assets you claim the bonus deduction for that expenditure in your tax return 2024 when the asset is both:
- first used or installed ready for use for any purpose between 1 July 2023 and 30 June 2024
- used or installed ready for use for a taxable purpose between 1 July 2023 and 30 June 2024.
For eligible expenditure on improvements to assets incurred between 1 July 2023 and 30 June 2024, you will also claim the bonus deduction for that expenditure in your tax return 2024.
An entity with a substituted accounting period may claim the bonus deduction across more than one income year, provided the eligible asset was first used or installed ready for use, or the improvement cost was incurred, between 1 July 2023 and 30 June 2024.
Continue to: Withholding obligations for CCIV sub-funds
Return to: Instructions to complete the attribution CCIV sub-fund tax return 2024