Australian Government Encourages Small Businesses to Go Electric with $314 Million Tax Break

Solar panels are seen on the rooftop at AGL's new Docklands office in Melbourne, Australia, on Aug. 20, 2015. Scott Barbour/Getty Images

The Australian government has introduced a $314 million (US$208 million) package to encourage small and medium-sized enterprises to electrify their businesses.

The government said the Small Business Energy Incentive scheme, which will be featured in the May 9 federal budget, would help Australian businesses “save energy and save on their energy bills.”

Up to 3.8 million Australian enterprises could be eligible for the new support.

Treasurer Jim Chalmers said small business would be one of the priorities of the upcoming budget.

“This incentive is all about helping small businesses 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.

Details of the Scheme

The new support package will come as tax deductions for small and medium-sized businesses.

Specifically, businesses with an annual turnover of less than $50 million will get an additional 20 percent deduction on expenditures that support electrification and improve the energy efficiency of their operations.

Examples of such investments include electrifying heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.

Businesses can claim up to $100,000 of total spending, and the maximum bonus tax deduction available under the scheme is $20,000 for each company.

The extra tax deduction will apply to eligible assets or upgrades that will be first used or installed and ready for use in the 2023-2024 financial year.

The government said the incentive would deliver ongoing power bill savings for businesses and help them lower carbon emissions.

“The Small Business Energy Incentive unlocks that investment to help businesses save on their bills over the medium and long term,” Energy Minister Chris Bowen said.

Australian Industry Group (Ai Group), a peak industry body, welcomed the government’s new incentive, saying it was highly attractive for local businesses.

Staff at La Camera restaurant prepares food in Melbourne, Australia, on Oct. 27, 2020. Darrian Traynor/Getty Images

“The new targeted tax incentive could be very helpful for millions of small and medium-sized businesses over the coming year, as long as the definition of eligible businesses and expenditure is easy to navigate,” Ai Group CEO Innes Willox said in a statement.

However, the CEO warned that a lack of suitably qualified tradespeople could hamper the program and suggested the government work closely with industries to deal with this issue.

Luke Menzel, the CEO of the Energy Efficiency Council, said the new policy came at the right time and would relieve businesses from high energy prices.

“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.

In addition, Menzel estimated that the incentive could result in $1.5 billion in investment to improve Australia’s energy performance.

The Epoch Times has reached out to the Liberal party for comment but has yet to receive a reply in time for publication.

Federal Budget Sees Significant Improvements

The new incentive comes as the federal government touted significant improvements to the May 9 budget’s bottom line and promised cost-of-living relief for Australian households.

On April 30, Finance Minister Katy Gallagher said the government had found billions of dollars in savings.

However, she noted that the final figure would be less than the $22 billion recorded in last October’s budget.

“I don’t think we‘ll get to quite where we were in October, it’ll be less than that, but it will be significant,” she told reporters.

“We’ve been saying for some time that we will get a significant improvement to the bottom line in the near term.”

Furthermore, the minister said the budget would contain “ongoing” investments and one-off measures to help people cope with living cost pressures.

“This budget will have a significant cost-of-living package, and that cost-of-living package will be targeted to the most vulnerable Australians,” she said.

Gallagher also rejected the Greens party’s calls for a two-year rent freeze, saying the best way to tackle the housing crisis would be the Labor government’s $10 billion affordable housing fund.

“If the Greens think you can wave a magic wand or snap your finger and solve some of these deeply entrenched issues ... they’re wrong. It’s simply not the case,” she said.