Aussie SMEs must prep for the new $20,000 tax write-off coming their way

Australian business owners should speak to their accountants immediately to find out about the new tax breaks and write offs starting in the new tax year. Businesses need to act quickly. There are a number of new tax write offs coming into effect from 1 July this year, but importantly, there are also a number of write offs that are coming to end on 30 June.

It is important that business owners speak to their accountant as a matter of urgency to ensure they are prepared. If they don’t they could be severely disadvantaged financially.

The current tax break scheme ends on 30 June but the good news is that Australian businesses could soon be claiming up to $200,000 according to an announcement made by  Treasurer Jim ChalmersClimate Change Minister Chris Bowen and Small Business Minister Julie Collins. The new tax breaks, which begin on 1 July 2023 will relate to businesses that purchase energy-efficient fridges or link their heating and cooling to solar energy.

Changeover at 30 June 2023

This new incentive, running from 1 July 2023 to 30 June 2024, will allow Aussie businesses to claim $20,000 on tax but depreciate it over the life of the item. The scheme is expected to cost $314 million over three years and help 3.8 million SMEs right across the country.

Similarly, if you are wanting to take advantage of the current instant asset write-off scheme that has been popular with tradies making claims on asset purchases in one year rather than eight, time is ticking away because you only have until 30 June of this year.

Better breaks for small businesses

In addition to this, small businesses with a turnover of less than $50m that make a switch to renewable energy will also be eligible for a 20% tax deduction in relation to the cost.

So if you invested $10,000 on an asset, you could actually write off $12,000. With the goal of helping businesses become more energy efficient and environmentally sustainable, this tax write-off applies to small and medium enterprises to encourage them to install solar panels and electrify cooling and heating, to install batteries and heat pumps and invest in induction cooktops to replace gas. The maximum bonus tax deduction is $20,000 per business.

Long term benefits

This write-off is definitely a boost to many SMBs that have been seeking to make changes but have been struggling to cover the upfront costs. But further to that, there are medium and long term benefits of helping these everyday businesses bring down their energy bills.

This amounts to thousands in accrued savings for SMBs. Of course there is the undeniable environmental benefit of swapping out polluting energy sources for renewable electric versions. It’s a great way to ensure that SMBs are encouraged to do their bit for the planet.

The importance of your business accountant

The changeover in govt schemes really highlights the role of your accountant because they are responsible for keeping tabs on the latest industry news, which includes any changes in schemes. They can then make recommendations that would be of benefit to your business.

Remember that accountants are not just there to help with your tax obligations but they also assist in looking out for potential cut backs and bonuses that they can bring to your firm.

Coco Hou is the Managing Director of Platinum Professional Training, a national training provider for the accounting and bookkeeping industry, and Platinum Accounting Australia, a national network of accounting and bookkeeping businesses that specialise in providing strategic and practical taxation, business and accounting advisory services.

Coco Hou, Managing Director of Platinum Professional Training