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In March of this year, the Federal Government announced a $17.6 billion economic stimulus package in response to the COVID-19 crisis and its ramifications on small businesses.
Part of this incentive involved an instant asset write off making commercial solar and other business investments even more of a no-brainer for Australian businesses.
What is the instant asset write off?
Certain business expenses that were above $30,000 previously could not be instantly deducted from your business tax.
Instead, you could claim a deduction each year based on the depreciation of value of that item. This means small businesses could previously only claim a portion of the cost of any solar systems >$30,000 each year.
However, as of March 12, 2020 the threshold has been increased to $150,000.
What does this mean for commercial solar now?
Until December 31 2020 any commercial solar installation up to $150,000 can now be instantly written off as a tax deduction.
As long as you’re using your solar for business purposes, this can be applied to most systems including:
- Larger systems for shopping centres, warehouses, and factories.
- Smaller commercial solar of even just a few panels
One of the most popular commercial system sizes in Australia is 100kW. This is a common choice among industrial warehouses and production centres and typically generates 430-480 units per day. The cost of such a system varies state by state but typically falls between $90,000 to $100,000 and has had instances of saving businesses anywhere between $30,000 – $40,000 per year.
Under the current instant asset write off scheme, the cost of a system of this size (and even higher) can now be written off in your 20/21 FY tax return.
Who is eligible to claim?
Along with the threshold increasing the maximum aggregated turnover has also increased. Basically this means as long as your business isn’t turning over more than $500 million annually you’ll be eligible to claim the instant asset write off.
Unfortunately, assets purchased before March 12 and after December 31 2020 will not be eligible for the $150,000 write off, or assets not installed or used before December 31.
Even with some eligibility limitations, the majority of commercial solar systems can be claimed under the write off.
We’ve already seen an increase in demand for solar installs. If you are currently considering commercial solar we recommend getting in touch with us to discuss your system needs and arranging an installation timeframe that works for your business.
To find out more about commercial solar click here
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