The Australian Government recently announced a significant incentive; “Instant Asset Write Off” to help small and medium businesses. The modified Instant Asset Write Off scheme allows business owners to immediately write off depreciable assets that cost the business less than $150,000.
Whilst this is still pending we have provided the below information to assist our customers on how this works for a solar purchase. We will be updating this page as information becomes available.
To be clear, it is important that the you check with your tax advisor to see whether this strategy works for you.
PLEASE GET IN TOUCH WITH YOUR SMART CONSULTANT TO TALK THROUGH THIS OPPORTUNITY FURTHER.
1. WHO IS ELIGIBLE?
Any business that turns over less than $500 million dollars.
2. WHAT CAN CUSTOMERS CLAIM?
Our clients can claim the total value of an asset up to the value of $150,000 Ex. GST from their next BAS.
3. WHAT BENEFIT DOES THIS HAVE?
This would be highly beneficial to any business purchasing a solar system. The write off amount of $150,000 will effectively write off the total cost of a 100 kWp solar system, immediately assisting cash flow and allow the business to claim an additional $50,000 in Small Scale Trading Certificates (STC’s) as an instant cash injection.
4. WHAT ABOUT FINANCE?
Organisations don’t need to have upfront cash to benefit from the scheme. It is possible to pay for equipment via a payment plan such as a Chattel Mortgage. This means organisations can pay via more affordable instalments over time. Once new equipment is bought, organisations can instantly claim the full value of the transaction as depreciation.
5. PRACTICAL EXAMPLE
Based on a typical 100 kWp system you could expect:
Gross System Value- $150,000
Asset Write Off Tax Benefit (30% company tax rate) + $45,000
Small Scale Trading Certificate Rebate (STC) + $50,000
Net System Value = $55,000
The projected payback on 100kW system is 2-2.5 Years.
If you already have a solar system, a system expansion would be your best option or potentially a battery to add to your existing solar system. The same applies in terms of the asset value however there will be no STC’s unless we keep your total system size under 100 kWp.
6. NEXT STEPS
Our team would be happy to put together a formal quotation for your review. Once you have this, we suggest that you speak with your accountant to make sure your business is in a position to take advantage of this package.
The process requires the you to enter the agreement to purchase solar. Whilst the lead time to installation is taking place, the purchase can be recognised on BAS immediately. Once the installation takes place you will start seeing energy savings.
WANT MORE INFORMATION?
Please visit the following website for more information on how this could apply to your business: