Federal Budget 2023: $314m to help make small businesses more energy efficient

Small and medium-size businesses that invest in equipment to cut their energy bills could be eligible for up to $20,000 in tax relief under a scheme to be introduced in the budget.

Small and medium-size businesses that invest in equipment to cut their energy bills could be eligible for up to $20,000 in tax relief under a scheme to be introduced in the budget.

Treasurer Jim Chalmers will on Sunday unveil the government’s Small Business Energy Incentive to be included in next month’s budget, which will potentially benefit 3.7 million businesses around Australia, including 1.2 million in NSW.

Under the scheme, businesses with a turnover of up to $50m will be given a tax incentive to invest in converting their heating and cooling systems from gas to electricity, and to install more efficient fridges and induction cooktops.

They will also get a tax break by for installing batteries and heat pumps.

The government is aiming to help businesses that are struggling with the upfront costs of investments to cut their energy consumption.

Up to $100,000 of total spending on energy efficiency will be able to written off, with the maximum bonus tax deduction being $20,000 per business.

The scheme will cost $314m over the next four years.

Jim Chalmers partnered with LSKD for a ‘train with the Treasurer’ event on Saturday. The Treasurer is keen to help small and medium-sized businesses.

The extra $20,000 tax deduction in the next financial year will be on top of the normal depreciation deduction of business equipment.

Treasurer Jim Chalmers, who on Saturday visited the street clothing brand LSKD outlet in his electorate in Brisbane, said small businesses were the engine room of the economy and would be front and ­centre of the May budget.

“This incentive is all about helping small business save energy and save on their energy bills; support that comes on top of the direct energy bill relief for small businesses that will be a centrepiece of the budget,” he said.

“We want to see more incredible small business success stories like LSKD making the jump to the big league.”

He said policies like the Small Business Energy Incentive were about giving small businesses the leg-up they need to expand and grow.

Small Business Minister Julie Collins said small businesses were facing increasing cost pressures, including from energy prices.

“This new incentive will help address costs, support growth and improve the resilience of Australia’s small businesses,” she said.

Climate Change and Energy Minister Chris Bowen said small businesses knew there were options out there for upgrading their facilities to lower their energy bills.

“But until now (they) have struggled with the upfront costs to make those investments,” he said.

“The Small Business Energy Incentive unlocks that investment to help businesses save on their bills over the medium and long term.”

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