Small business energy incentive

The federal government has announced a small business energy incentive as part of the 2023-24 Federal Budget, which allows a business with an aggregated annual turnover of less than $50 million a 20% bonus deduction for expenditure that supports electrification and the more efficient use of energy.

The additional deduction will be available for eligible expenditure of up to $100,000 and is therefore capped at $20,000 for each business.

Eligible expenditure

The eligible expenditure for this scheme will include a range of depreciating assets, as well as upgrades to existing assets which include upgrades to more efficient electrical goods such as:

  • energy efficient fridges
  • assets that support electrification (eg heat pumps and electric heating or cooling systems), and
  • demand management assets (eg batteries or thermal energy storage).

A full list of eligibility criteria will be finalised in the consultation phase and communicated with stakeholders in due course.


Certain exclusions will apply, such as:

  • electric vehicles
  • renewable electricity generation assets
  • capital works, and
  • assets that are not connected to the electricity grid and use fossil fuels.

Contact us

If you are planning to spend on electrification and the more efficient use of energy, consider conducting installations and upgrades to eligible assets in the 2023-24 income year to be able to avail of the $20,000 bonus tax deduction.

Any expenditure incurred in excess of the $100,000 cap may still be eligible for other tax deductions under small business depreciation rules.

Please feel free to contact our office if you need more information about this tax incentive.


More Blogs