Why invest in solar energy for business?
Tax incentives for commercial solar
Since the pandemic, the Federal government has introduced stimulus measures to help businesses recover from the impact of lockdowns. Businesses that install solar energy systems may be able to take advantage of two attractive tax incentives:
- Under the temporary full expensing incentive, businesses with an aggregated turnover of less than $50 million can deduct the business portion of the cost of eligible new and second-hand depreciating assets (for businesses with a turnover of between $50 million and $5 billion, this incentive applies only to new depreciating assets).
- A second incentive, called loss carry back, is designed to work in tandem with temporary full expensing. Investing in a depreciating asset might result in a tax loss. If so, eligible businesses can carry back that tax loss to an earlier financial year. That, in turn, may trigger a tax refund from that earlier financial year, giving eligible businesses a boost to their cash flow today.
It’s best to get professional tax advice before proceeding to make sure your business is eligible for these incentives.
Get money back from Solar Feed-In Tariffs
A Solar Feed-In Tariffs is a credit paid to customers for unused solar electricity that is exported to the grid. If you don’t use all the solar energy your business generates each day (eg. your business only operates Monday to Friday), you may be able to get paid credit for your surplus solar energy. This is like the cherry on top of the savings you achieve by using your own free solar energy during the day.
Other incentives for going green
Depending on the state you’re in, you may qualify for green building grants or subsidies. In NSW, for example, the Energy Savings Scheme offers incentives to eligible NSW businesses that have achieved a NABERS (National Australian Built Environment Rating System) energy rating.
For businesses with a commercial property loan, Commonwealth Bank has just rolled out a new Property Sustainability Upgrade Loan aimed at helping Australian businesses go green. Eligible businesses will have their loan fees waived when they increase their commercial property investment loan up to 20% to implement property sustainability upgrades. This includes solar panel installations. The upgrades must achieve a NABERS rating or reduce the property’s carbon emissions.
With the Property Sustainability Upgrade Loan, eligible businesses will have their loan fees waived when they increase their commercial property investment loan up to 20% to implement property sustainability upgrades.
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