The guide to saving thousands with the Small Business Energy Incentive




May 18, 2023

Starting 1st July, your business could be eligible for a tax break of up to $20,000.

It's all thanks to a federal government initiative called the Small Business Energy Incentive. The move is designed to help 3.8 million businesses around the country get to zero emissions in a way that's good for long-term profits and the planet.

So how does the Small Business Energy Incentive work, how do you qualify and what savings could you expect?

The Small Business Energy Incentive, in a nutshell

The Small Business Energy Incentive is an additional 20 percent tax deduction for spending related to either: 

  • Switching equipment that relies on gas or petrol with tech that runs on electricity
  • Upgrading equipment to be less power-hungry

Up to $100,000 of spending is eligible for the 20 percent deduction.1 So if a business spent this full amount, they could see a maximum $20,000 reduction on their taxable income.

And this isn’t the only saving to be made when you invest in sustainable equipment – more on this shortly.

How can you qualify?

Lots of businesses could receive the deduction at tax time next year – from retailers to restaurants to offices. To be one of them, your business needs to:

  • Make less than $50 million a year
  • Have the upgrades either installed or first used between 1st July 2023 and 30th June 2024

Alright, enough tax talk – let’s see where you can improve your business’ operations, lower your ongoing costs and shrink your carbon footprint.

What do you need to do?

There are lots of simple ways businesses can take advantage of the incentive. This could include:

  • Switching from gas to induction stoves
  • Switching from gas to electric heating
  • Installing timers and sensors to turn off appliances when not in use
  • Upgrading to more efficient fridges
  • Installing solar panels and batteries

Here’s our rule of thumb: if there's a piece of equipment that your business uses, and there’s an electric alternative or a way to use less power, then you have an opportunity to upgrade and get a deduction.

Sign up to Greener for Business for a range of guides to upgrading appliances, installing timers and sensors, installing solar and more.

What are the ongoing savings?

Beyond the tax deduction, you’ll see continual savings on your energy bill because your new equipment uses less power. This means that while the investment in electric and energy-efficient equipment may have short-term costs, your business could make back the money and ultimately pay less in the long run.

For example, more efficient heating and cooling could cost the average retailer up to $7,500 to implement, but could save more than $5,000 on power bills each year.2 Through lower running costs and the bonus deduction, the price of investment could be recouped after less than 18 months.

More efficient heating and cooling could reduce the average retailer’s annual emissions by 25 tonnes – the equivalent of driving over 170,000 kilometres.3 And if the new air con means no longer wearing five layers to work in winter, it’ll make for a happier team too.

What to do next?

The 20% tax break and ongoing savings mean investing in sustainability is more affordable than ever. Ready to see how becoming better for the planet can be better for your bottom line?

Sign up for Greener for Business to receive a personalised pathway that’ll help you reduce costs and get to zero emissions.

Sustainability Victoria
National Transport Commission