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Commercial Solar Instant Asset Write-off: $150k Tax Deduction (Extended)

Author: Mike Holiday
Last Updated 1st July 2021

The Federal Government has extended the Instant Asset Write-off for businesses until 30 June 2022. Eligible businesses can claim $150,000 in immediate deductions for a commercial solar system.

Even without the instant asset write-off, installing a commercial solar system on your business’s roof is a proven investment. The extension to the Instant Asset Write-off scheme has guaranteed profitability of an investment in solar power for businesses looking to drastically reduce overheads.

Who can benefit from the extension?

  • Businesses with limited roofspace installing smaller commercial systems (under 100kW).
  • Businesses installing 100+ kW solar systems to maximise their roofspace
  • Solar Farm Businesses

What are the current incentives?

Due to COVID-19, the Australian government announced a stimulus package to help Australian businesses during the pandemic. Two of the schemes are of particular importance when considering purchasing commercial solar.

  • The Instant Asset write-off
  • Backing Business Investment

The Instant Asset Write-off for Commercial Solar

Eligible businesses can claim an immediate deduction for the business portion of the cost of a commercial solar system the year it is installed ready for use.

Instant Asset Write-off can be used for:

  • multiple assets (panels, inverters, racking), if the cost of each individual asset is less than the relevant threshold

Small businesses will need to use simplified depreciation rules to claim the Instant Asset Write-off.

Backing Business Investment for Commercial Solar

Eligible businesses, for the 2019–20 and 2020–21 income years, may be able to deduct the cost of new depreciating assets at an accelerated rate using the Backing Business Investment – accelerated depreciation rules.

For a new asset (i.e. a commercial solar array), the Backing Business Investment – accelerated depreciation deduction applies in the income year that the asset is first used or installed ready for use for a taxable purpose.

The deduction can be claiming lodging your business’s tax return for the income year. The usual depreciating asset arrangements apply in the subsequent income years that the asset is held.

For businesses yet to lodge their 19-20 or 20-21’ tax returns who have purchased solar, the 1st update of government stimulus packages these rules apply:

[1ST UPDATE] - (12 March 2020 - 30 June 2020)

Instant Asset Write-off:

  • The threshold increased from $30,000 to $150,000
  • Eligibility expanded covering businesses with an aggregated turnover of less than $500 million.

Backing Business Investment

  • Businesses can deduct the cost of new depreciating assets at an accelerated rate
  • Deductions may equal 57.5% (rather than 15%) of the business portion of a new depreciating asset the year it is added.

If your business has yet to invest in commercial solar but you are looking to reduce your overheads the recent update applies:

[RECENT UPDATE] - (30 June 2021 - 30 June 2022)

Backing Business Investment

Unfortunately,Backing Business Investment for commercial solar has ended. However, businesses can capitalise of tax incentives through the Instant Asset Write-off until 30 June 2020!

Instant Asset Write-off:

The Instant Asset Write-off is extended until 2022 with updated criteria:

  • Threshold of $150,000
  • Eligibility covers businesses with an aggregated turnover of less than $10 million.

The extension to the scheme provides small businesses with a great opportunity. If your business is eligible, you can purchase and install a commercial system up to the value of $150k and claim it all as a tax deduction.

$150,000 in deductions is the equivalent of a commercial system with a capacity between 100kW to 150kW, which more than adequately covers the energy demands of most businesses.

Is your business eligible?

Eligibility Criteria:

  • your aggregated turnover is less than $10 Million
  • the date you purchased the asset and when it was first used or installed ready for use is before the relevant cut off dates for each period.
  • the cost of the asset is less than $150,000

Discover the commercial solar rebates and tax incentives available to your business by requesting your free energy audit & no-obligation quotes from our commercial solar specialists. Click 'Get Quotes' to start your cashflow positive solar journey today!

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