Secure energy savings and tax savings with the $20,000 instant asset write-off for solar
As part of the Federal Government's 23-24 Budget, the Australian Government has announced changes to the asset write-off.
Before this announcement, the threshold on eligible small business asset purchases was due to drop back to the $1,000 threshold on 1 July 2023, but the budget has proposed instead to increase the rate to $20,000, in a 12-month extension to June 30 next year (2024).
While the measure is not yet law, if it is legislated, the asset write-off provides a way for businesses to lower their taxable income and invest in assets that help with their business operations.
When applied to business solar specifically, this tax break offers small businesses the unique opportunity to invest in an asset that manages costs through periods of uncertainty and beyond.
Highlights of claiming business solar as part of the asset write-off:
Frequently Asked Questions: Business solar tax deductions
Are solar panels tax deductible for businesses?
Solar panels can be depreciated like other new business assets. This also applies if you don't own the building.
If you are an eligible small business and your total purchase is $20,000 or less, your purchase could be deducted through the asset tax write-off.
Is my business eligible for the tax deduction for solar?
Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
What assets are not eligible?
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.
Can I write off multiple assets?
The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
What solar businesses rebates are available?
STC and LGC rebates are the key federal rebates available for businesses. Other state based incentives do exist. When you work with Choice Energy we can work with you to identify what's available for you. Learn more
Can I claim solar panels as a business expense?
Most solar systems aren't rented or leased so can't be expensed, but assuming you are eligible small business, they will be eligible for depreciation or the instant asset write-off if the purchase is $20,000 or less.
Are solar batteries tax deductible?
Are solar panels tax deductible for landlords?
If the landlord has paid and installed the solar system themselves, they are eligible to deduct the cost of a solar system.
Tenants' solar systems can't be deducted by the landlord.
How does depreciation work for solar panels?
As a capital asset, solar depreciates over time, and if eligible, your business can write-off the cost of the asset over a determined period of time, set by the Australian Tax Office.
The effective life for a solar system is 20 years. "The effective life is used to work out the asset's decline in value (or depreciation) for which an income tax deduction can be claimed."
Businesses can choose to depreciate their investment in solar via the Diminishing Value Rate (10%) or Prime Cost Rate (5%).
Businesses should consult a financial expert to determine what makes most financial sense for them.