The Federal Government has provided some energy price relief for small businesses in the recent Budget 2023-24 that was announced two days ago.
This plan aims to reduce expected electricity price growth in 2023–24 by 25 percentage points and reduce expected retail gas price growth by around 16 percentage points compared with before it was announced.
The Federal Government is also partnering with state and territory governments to deliver up to $3 billion of electricity bill relief for eligible small businesses. From July this year, this plan will deliver up to $650 for eligible small businesses.
This Budget also aims to help SMBs make energy-saving upgrades through the Small Business Energy Incentive. This incentive will help businesses save on their power bills through smarter energy use.
This incentive will provide $310 million in tax relief and support up to 3.8 million businesses to make investments like electrifying their heating and cooling systems, installing batteries and upgrading to high-efficiency electrical goods.
Businesses with annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy from 1 July 2023 until 30 June 2024.
Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business. This is in addition to $62.6 million towards energy efficiency grants for small and medium enterprises in the October Budget.
In addition, the Federal Government has committed to supporting investment in energy efficient commercial buildings. From 1 July 2025, it will extend the clean building managed investment trust withholding tax concession to eligible warehouses where construction commenced after Budget night. Buildings will need to satisfy higher energy efficiency standards to qualify for the concession.
It has also allocated $14.8 million towards the establishment of the Powering Australia Industry Growth Centre, which will support Australian businesses looking to manufacture, commercialise and adopt renewable technologies. This is in addition to the up to $3 billion allocated to investment in low emissions technologies including green metals under the National Reconstruction Fund.
The announcement of incentives for small and medium business to upgrade and update their energy usage is very welcome, according to Ai Group chief executive Innes Willox.
“Business energy upgrades can deliver a triple dividend by lowering bills, emissions and the pressure on our energy systems as they transition,” Willox said.
“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.
“History tells us incentives of this type are highly attractive to business.”
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