New Tax Incentives for Businesses Announced
It’s good news for businesses of all sizes across Australia, with recent measures unveiled in the federal budget to provide what they’re calling the “largest set of investment incentives” ever offered.
An overview of the temporary tax incentives are detailed below.
Immediate Expensing
Businesses with a turnover of less than $5 billion will be able to immediately deduct the full cost of new, eligible assets of any value in the first year it is used or installed, before June 30, 2022.
With the hope to encourage businesses to spend more now, the Immediate Expensing incentive allows businesses to claim the full amount of an asset as a tax deduction up front, reducing the amount of tax a business will pay.
In the past, a portion of the asset would have been tax deductable in the first year, with the resulting to be depreciated over future years.
Instant Asset Write-off Extension
The Government is also extending the instant asset write-off, which had already been increased as part of its response to the COVID-19 pandemic.
Businesses with turnover of up to $500 million can instantly write-off multiple assets worth up to $150,000 each. The extension will now provide businesses with an extra 6 months until June 30, 2021 to first use or install assets purchased by the end of this year.
Loss Carry-back
Previously, if a business makes a loss it must wait until it returns to profitability to claim them as an offset on its tax bills. However, the temporary "carry-back" incentive will allow businesses to receive a cash refund of taxes paid on previous profits if they post a loss.
The incentive means businesses with a turnover of less than $5 billion won’t have to wait until they next post a profit to receive a tax benefit.
Install solar to take advantage of the new tax benefits
With the new tax incentives announced combined with many businesses needing to reduce costs as much as possible, now is the perfect opportunity to install a commercial solar system. Electricity costs are an ongoing expense your business will always need to account for. Installing a commercial solar system represents a solution which can significantly reduce electricity costs from day one. The new tax incentives presented offer a financial benefit that can make the business case for installing a commercial solar system even more attractive.
Benefits of Solar
High Return on Investment
Just like any major purchase, solar is a significant financial investment. To ensure your business makes the right financial decision, our commercial energy consultants will provide your business with a customised proposal, addressing all factors to consider including capital outlay, investment yields, payback periods, NPV and more.
Reduce Business Risk
Business owners face ongoing uncertainty with their electricity costs due to rising electricity prices. Installing a commercial solar system allows your business to produce a portion of its own electricity requirements on site, allowing your business to keep one of your largest expenses under control.
Reduce Carbon Emissions
Installing a commercial solar PV system will help your business significantly reduce its carbon emissions. Plus, because your solar electricity is generated on-site with no transmission losses, it offsets even more than it generates.
Being seen as a green company is a great PR and marketing tool, making your business more attractive to both staff and customers.
If you’d like to take advantage of the new tax incentives, please contact us today and we will provide you with a customised quote.
Please note, you should always seek your own accounting and financial advice.
