Coronavirus: Government Stimulus & Instant Asset Write Off for Commercial Solar
After the bushfire disasters, Australia (and the rest of the world as well) is under another ordeal. The spread of the coronavirus, COVID-19 has a direct impact on the economy. Times are indeed tough for businesses.
In an effort to combat the ongoing challenges in the country, the Federal Government is currently providing a $17.6 billion economic stimulus. It consists of a range of incentives, including a tax deduction for commercial solar power. If a solar system is one of your planned investments this year, this stimulus will bring much-needed relief to your firm.
The benefits will be given to companies that want to find a way to enhance their tax deductions. As you may already know, using renewable energy solutions, including solar power systems, is encouraged in the country. Even better, all arrays, no matter what their size or format, can take part in this scheme.
In other words, you do not have to carry a large number of kilowatts for your property to enjoy the benefits. Small and medium businesses with limited roof spaces, as well as those with large systems that come with thousands of panels, will receive the incentive. Warehouses, factories, and even solar farms are supported in the scheme.
Coronavirus: Solar Investment Write-Off Increased to $150,000
The Economic Response to the Coronavirus by the Australian Government provides information about how support for business investments will be delivered throughout the year and beyond.
The previous threshold was only $30,000 but was recently lifted to $150,000. It is a substantial expansion that provides businesses even greater incentive to invest in a solar system.
In Coronavirus, this particular Instant Asset Write-Off scheme is for businesses that have an accumulated turnover lower than $500 million per year. The initial limit was just $50 million. This expanded access will remain active until 30 June 2020. However, all commercial PV systems will continue receiving an incentive until 2021, provided they have been installed by next year.
More importantly, this threshold is on a per asset basis. Therefore, if you are among the eligible businesses, you can write off different assets immediately, including your solar system and other investments.
To sum it up, this incentive has the following requirements for businesses to be qualified:
- You have an annual turnover of less than $500 million.
- You have installed the solar system during this financial year, which means before 30 June 2020.
- All purchases amounting to a maximum of $150,000 will be covered.
Businesses need to understand the points above, especially the third one. It has indeed become much easier to pay for commercial solar power. Plus, you can use the stimulus to pay for other company expenses, including insulation and investment technologies for lowering natural gas consumption.
The only thing to remember is that all purchases should be within the $150,000 limit; otherwise, you will not qualify for the Asset Write-Off this financial year.
Do note that if you require any advice regarding how you can avail of the write-Off, you should not hesitate to seek assistance from a professional accountant.
Supporting Businesses Until 2021
Aside from the Instant Incentive Write-Off, businesses will also receive another tax incentive. Dubbed the “Backing Business Incentive,” it is a part of the coronavirus stimulus package in which the Government will provide a time-limited investment incentive until the next financial year (30 June 2021).
For 15 months, the incentive will run to support businesses and their investment. It is one of the Federal Government’s efforts to stabilise economic growth in Coronavirus. Even for a short period, it can help the economy since businesses will be more inclined to make investments. This initiative will also accelerate deductions on depreciation.
Who can take part in this scheme? All businesses whose turnover is less than $500 million can benefit from this incentive. They will earn a 50% deduction on the cost of the installation of a qualified asset. The current depreciation rules will apply to the remaining price of the asset installed.
In other words, all expenses, whether small or big, will have a 50% discount off its original price. The only requirement is that this investment or purchase should occur before 30 June 2021.
A 50% Deduction for Large-Scale Solar Farms
Apart from small to large businesses, the Backing Business Investment scheme also supports other purchases, as long as they meet the $500 million business yearly turnover limit. Solar farms with solar power exceeding hundreds of megawatts will benefit from the incentive.
If you are thinking about getting a commercial solar system installed with over 100 kW or you wish to build a solar farm with the same capacity, you will surely find this incentive helpful.
All parts of the stimulus package will be enacted right away. If you are an installer or a business, now is one of the best times to have solar systems up on the roofs. There are already plenty of reasons why switching to solar is a smart choice. This scheme, however, adds to these actual reasons and you can expect different advantages as well, including:
- The Instant Write-Off has increased to $150,000, which was $30,000 previously (as mentioned above. Qualified companies are those that are sitting under $500 million as the yearly turnover.
- There is also a 50% bonus depression, which will be applied in the first year.
- Another 50% on business account statements (BAS) will be paid directly to your business account.
- Finally, there is yet another 50% benefit for the salary of a company’s apprentices. You will receive the payment directly to your bank account.
Overall, the $150,000 is enough for paying off a system with a capacity of 100kW. Prices depend on how complex the installation is and where the business is located.
Because of the low-interest rates, businesses can benefit from the greater accessibility of solar systems. The stimulus package overall, including the write-off itself and the bonus tax write-off can provide a lot of savings. It also includes a GST rebate and of course electricity savings. It is safe to say that the majority of companies will not even need cash on hand to start any installation.
Instant Asset Write-Off
One of the key incentives offered by governments is the instant asset write-off scheme, which allows businesses to immediately deduct the cost of eligible assets, including commercial solar installations, from their taxable income. This scheme provides businesses with a significant financial advantage by reducing their upfront investment costs and improving cash flow. By taking advantage of the instant asset write-off, businesses can accelerate their return on investment and realize the financial benefits of commercial solar sooner.
Driving Economic Recovery
Government support for commercial solar not only benefits individual businesses but also contributes to overall economic recovery in Coronavirus. By encouraging businesses to invest in renewable energy infrastructure, governments create job opportunities in the solar industry, stimulate economic growth, and drive innovation. The installation of commercial solar systems requires skilled labor, which leads to the creation of green jobs, supporting local economies and fostering sustainable economic development.
The promotion of commercial solar aligns with the global commitment to combat climate change and transition to clean energy sources. By investing in solar energy, businesses can significantly reduce their carbon footprint and demonstrate their commitment to environmental sustainability. Commercial solar installations contribute to the reduction of greenhouse gas emissions and promote a greener and more sustainable future. Moreover, businesses that embrace solar energy often enjoy enhanced brand reputation and customer loyalty, as they align with the values of environmentally conscious consumers.
Long-Term Cost Savings
Commercial solar offers businesses substantial long-term cost savings. By generating their own clean and renewable energy, businesses can reduce their dependence on traditional energy sources and lower their electricity bills. Over time, the savings from reduced energy costs can offset the initial investment in solar installations, resulting in significant financial benefits. Additionally, commercial solar systems are known for their durability and longevity, providing businesses with a reliable and cost-effective energy solution for years to come.
Energy Independence and Reliability
The adoption of commercial solar empowers businesses with energy independence and reliability. By generating their own electricity on-site, businesses can mitigate the risk of power outages and price fluctuations in the energy market. This energy independence not only ensures uninterrupted business operations but also provides businesses with greater control over their energy consumption and costs. With commercial solar, businesses can take charge of their energy future and achieve a more sustainable and reliable energy supply.
Cost Savings and Return on Investment
One of the most compelling reasons for businesses to embrace commercial solar is the potential for long-term cost savings and a favorable return on investment. By generating their own electricity from solar panels, businesses can significantly reduce their reliance on conventional energy sources and lower their monthly utility bills. The savings accrued over time can offset the initial investment in solar panel installation, resulting in substantial cost reductions and improved financial performance.
A Note to Customers
The economic stimulus from the Government is to help people stay employed. The aim is to encourage businesses to continue with their purchases and investments to help keep the economy stable.
With the Instant Write-Off tax incentive recently increased in Coronavirus, numerous businesses are expected to rush into buying before the offer expires. It is a great time to spend money on a real investment that will provide value for you in the future.
However, be on the lookout for installers who just want to earn money. They may not have enough experience and knowledge to install solar.
Always choose reputable companies, such as Easy Solar, to enjoy the benefits of a truly efficient, high-quality solar system.