21 October 2020
Business can supercharge a Green Recovery
Green recovery initiative
Australian businesses can take advantage of the Federal Budget’s tax incentives to supercharge a Business led Green Recovery.
The government has unwittingly provided Australian business an opportunity to use immediate tax incentives to drive an Australian green recovery.
There is a two-year timeframe to utilise the temporary full expensing measures - 100% Instant Asset Write Off and Research and Development Tax Incentive Schemes, and pivot your business to a low emission and low operating costs future.
There are many low interest green loans and community investment schemes available to enable a Green Recovery led by Australian businesses.
Businesses can buy solar panels, turn their fleet to electric vehicles or buy that energy saving equipment and receive a full immediate rebate. They can lower their operating costs and supercharge Australia’s roadmap to Net Zero.
Speak to your accountant about how best to use these incentives to maximise the green stimulus for your business.
The green recovery opportunity
The temporary full expensing measure: the largest single line item in the budget ($26.7bn) allows busin
esses with aggregated annual turnover of less than $5bn to deduct the full cost of eligible capital assets acquired from 6 October 2020 and first used or installed by 30 Jun 2022. This applies to new depreciable assets and improvements to existing eligible assets. For small and medium sized businesses (turnover less than $50m), full expensing also applies to second-hand assets. For more information CLICK HERE.
Instant asset write off: Businesses with annual turnover between $50m-$500m can instantly write off the cost of an eligible second hand asset worth less than $150,000 until June 2021 to first use or install those assets. For more information CLICK HERE.
Research and development tax incentive:For companies with turnover of less than $20m, the refundable R&D tax offset is being set at 18.5 percentage points above the company's tax rate. There are also changes to the number of tiers for larger companies. For more information CLICK HERE.
Record low interest rates are available to businesses, some state and territory governments are offering rates as low as 0% for energy efficiency projects, similarly a range of green loan and financial providers can offer more competitive rates to encourage investment in green technology renew economy link. For details on Government programs available CLICK HERE.
Green recovery projects for your business
- Businesses have saved up to 100% of their power bill through installing solar, with a payback on the investment of less than 4 years even before these tax incentives
- Invest in solar panels, smart metres and battery storage for energy
- Invest in more energy efficient technology, appliances and refrigeration
- Click here to find a solar installer near you
- It costs on average $1.50/L of fuel to run a petrol vehicle vs $0.33/eL to run an electric vehicle
- Maintenance and repair costs of electric vehicles are negligible compared to petrol vehicles
- Upgrade your vehicle fleet to electric vehicles
- Consider an electric bike fleet for short commutes
- Invest in an electric vehicle charging station to draw new customers to your business
- The Electric Vehicle Council of Australia for further information on the options available, costs and benefits of switching to an EV Fleet
- Improve your efficiency and future proof your business, modern technology such as laser cutters for textiles can reduce waste of resources by up to two thirds, reducing supply costs and waste processing
- Specialist businesses can invest in plants and machinery to better address waste and recycling. Complimented by the incoming Recycling and Waste Reduction Bill 2020, there are a number of opportunities in this space
- The water restrictions of last summer had a huge impact on many businesses, improve your water efficiency and capacity to save water to future proof your business
- Install a rain water tank and butts to collect rainwater for use where suitable
- Install a grey water system
Research shows that there is a solid business case for investing in a green transition. Using data on 9,236 small and medium businesses in 35 countries across Europe and the US, research from Small Business Economics journal suggests that on average, businesses benefit from going green. Key areas of benefit include:
Environmental, Social and Governance goals - ESG policies are a key feature of the business landscape, a green recovery investment can help businesses demonstrate progress towards their ESG goals
Access to innovative and niche markets - businesses have an opportunity to take advantage of a rapidly growing market with an abundance of opportunities. The UN estimates the global green economy is currently worth US$4 trillion with the potential to grow to US$90 trillion by 2030
Employee motivation - purpose led businesses show much greater employee satisfaction, similarly environmental, social and governance (ESG) goals are a great tool for employee recruitment and retention. Deloitte research shows that such purpose driven companies report 30 percent higher levels of innovation and 40 percent higher levels of workforce retention than their competitors
Greater engagement with clients - aligning your business with key environmental and social concerns around emissions and sustainability will result in improved client and customer engagement. Deloitte research shows that 55 percent believe businesses today have a greater responsibility to act on issues related to their purpose
Increased efficiency - increase your business cash-flow by lowering your operating costs and future-proofing your business.
You can view the Smart Energy Council webinar on making the most of the Instant Asset Write Off and on smart energy for small business click the links to view recordings of the sessions which provide real examples of how businesses have been using these incentives to save money for their businesses and transition to green energy.
Note these webinars were recorded prior to the release of the Federal Budget, the programs mentioned have since been extended and expanded.
ColourMaker is a local business in Warringah that has converted to solar power,
“I couldn’t believe how much of a no brainer installing solar turned out to be. If I’d known before I would have done it years ago.”
David Stuart, Owner, ColorMaker Industries
Below is a summary of the financial payoff of the solar installation
Here is a short clip on the ColourMaker story
Manly Spirits Co. has also made the transition
Further case studies are available HERE
Supporters of a Green Recovery
John Grimes, the Chief Executive of the Smart Energy Council encouraged businesses to embrace the Instant Asset Write Off and invest in solar, battery storage and electric vehicles.
“Businesses can instantly save money and reduce emissions at the same time. Why wouldn’t you do that?
“The Smart Energy Council urged the Australian Government to extend the Instant Asset Write Off and we’re pleased that has happened. We appreciate the strong advocacy from Zali Steggall.”
John Grimes, Smart Energy Council
Warringah's Roadmap to Zero
To learn more about making your business / home / life more sustainable, visit Roadmap to Zero
Climate Act Now
To find out how you and your business can secure long-term business certainty and legislate a Net Zero by 2050 target, sign up to show your support for national climate legislation at Climate Act Now