The Commercial Solar Tax Write-Off

The Commercial Solar Tax Write-Off

by Aaron Ware

While the Australian economy shifts during the coronavirus pandemic, businesses are working tirelessly to keep everything running. As an Aussie business ourselves – born and bred – we’ve experienced that firsthand.

But there is light* ahead.

*Tax-free light.

One of the government’s most powerful incentives – the instant asset write-off – has recently been put into overdrive. It allows certain businesses to purchase large-scale equipment worth up to $150k and write it off against their taxes.

This makes new investments – like installing large solar arrays – extremely appealing.

How does the new instant asset tax write-off work?

Up until the 30th of June 2020, an Aussie business – with an aggregated turnover under $500 million – can claim an instant write-off on an eligible asset worth up to $150,000. The eligibility criteria covers most assets that add value to your business like vehicles or equipment (e.g. solar panels).

The incentive accelerates the deductions on depreciation for big items to this financial year – instead of having depreciation occur over several years. But incentives like these have always been around, so why is this one so special?

Well, it’s the sheer scale of it.

  • Asset price threshold – Has been increased from $30,000 to $150,000.
  • Eligible businesses – Previously only businesses that earnt less than $50 million  (aggregated turnover) were eligible. Now, businesses earning under $500 million can claim.

Does the instant write-off work for solar?

Yes, it does. Solar has always been a great option for lowering daily business costs. But now with the instant asset write-off it’s even more affordable to start the investment. And depending on your business’s power usage, the ROI can range between 25-40% every year. 

How much solar can you install?

Well, with a $150,000 limit, you could be looking at a system with 100 kW capacity. But the incentive will work for anything under that, too. So if your office has limited roof space, you could invest in fewer (but higher quality) solar panels.

Brisbane solar power systems in that range (up to 100 kW) are also eligible for Small-Scale Technology Certificates (STCs), reducing the overall cost of the solar package. 

Want to make the most of this generous incentive before the cut-off? Get in touch with our specialised team today.

Note: It’s important to get financial advice specific to your business’s eligibility and tax.

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