The following information is for general purposes only and should not be considered financial or tax advice. Always consult with a tax professional to understand what deductions might be applicable to your specific situation.
Investing in solar energy can offer various financial benefits, including potential savings on energy bills and tax incentives. Here’s a general overview of how different types of workers in Australia might benefit from the tax deductions and savings associated with solar and solar battery installations.
1. Solar Traders
Solar traders who invest in solar systems may find several business-related financial advantages:
- Asset Deductions: Solar panels and batteries purchased for business use may qualify as deductible business assets.
- Instant Asset Write-Off: Small businesses might be eligible to immediately deduct the business portion of the asset’s cost in the year it is first used or installed.
- Depreciation: Businesses can claim depreciation over the effective life of the asset if it doesn’t qualify for an immediate write-off.
- GST Credits: Registered businesses may be able to claim GST credits for the GST included in the price of the solar system.
As with anything related to tax please consult your tax advisor to understand what deductions might be applicable to your business.
2. Gig Economy Workers
Gig economy workers who use a home office may be eligible for certain tax benefits related to solar energy:
- Home Office Deductions: A portion of the costs of running a home office, including solar power, might be deductible.
- Depreciation: The cost of solar panels and batteries used for business activities could potentially be depreciated.
- Proportionate Expenses: Expenses related to solar systems may be partially deductible, depending on the proportion of business use.
3. Employees Working from Home
Employees required to work from home for a specified number of days per week may also benefit:
- Running Expenses: Additional running expenses incurred while working from home, including the cost of electricity, might be deductible.
- Fixed Rate Method: The ATO allows a fixed rate per hour worked from home to cover electricity and other expenses.
- Actual Cost Method: Employees can calculate the actual cost of electricity (including solar power) and claim a proportionate deduction based on hours worked from home.
- Depreciation on Home Office Equipment: Solar panels and batteries used to power home office equipment might be eligible for depreciation claims.
For more information, speak to a solar expert who can find the perfect solution for your home
Examples
To illustrate potential savings, here are some general examples that may be useful to discuss with your tax professional. Please note these are hypothetical and should not be considered financial advice.
Example for Solar Traders
- Cost of Solar System: $20,000
- Possible Immediate Deduction: If eligible (dependent on your business type, GST status, and home office set up), you may be able to deduct a significant portion of the $20,000, leading to potential tax savings in the year of installation.
- GST Credits: In some circumstances, businesses might be able to claim GST credits on the purchase price if registered for GTS for their business.
Example for Gig Economy Workers
- Cost of Solar System: $10,000
- Business Use Portion: 30%
- Possible Depreciation: A portion of the cost may be depreciated annually, leading to potential tax savings.
- Proportionate Expenses: Electricity savings due to solar could also be partially deductible.
Example for Employees Working from Home
- Cost of Solar System: $8,000
- Days Worked from Home: 2 days per week
- Possible Running Expenses Deduction: A portion of the electricity savings due to solar might be deductible.
- Possible Depreciation: The cost of solar panels and batteries used for home office equipment may be depreciated, leading to potential tax savings.
Important Considerations
- Record Keeping: Maintain accurate records of costs and usage to substantiate claims.
- Consult Professionals: Always consult with a tax professional to ensure compliance and to make the most of available benefits.
- Check ATO Policies: Ensure you are up-to-date with the latest policies and guidelines from the Australian Taxation Office (ATO). ShineHub does not take responsibility for any financial decisions made based on this article; you should consult your financial advisor before making any decisions.
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Looking for something bigger for your business or commercial enterprise?
Our commercial solar experts can help you design a bespoke solar solution for your business. If you are thinking of getting solar installed to help reduce cost of operations, contact us at commercial@shinehub.com.au and we can help you explore the potential of solar technology to transform your operations with sustainable and efficient energy solutions.
To help us provide you with an initial recommendation and energy savings estimate*, please email us at commercial@shinehub.com.au and provide the below information.
- 12 month of electricity bills for the venue
- Last 12 months of electricity usage interval data*
We will be in touch to discuss your requirements in more detail
Our team will contact you to discuss your needs further and map out next steps. If you have any immediate questions, feel free to contact ShineHub directly at commercial@shinehub.com.au. We look forward to working with you to help achieve your energy efficiency goals.
*Why does ShineHub need your electricity interval data?
Interval data can be requested from your energy retailer. It provides detailed information about your electricity use, recorded by your smart meter every 15-30 minutes.
This detailed breakdown helps us understand your energy consumption patterns more precisely than standard electricity bills.
By analysing when and how you use electricity—like during busy trading times or when heating and cooling demands increase—we can design a commercial solar solution that’s tuned to your specific operational needs. It ensures the system we recommend maximises both efficiency and cost savings.
Conclusion
Whether your business is big or small, there may be significant benefits of getting solar installed.
It is important to remember that, while solar energy can offer significant savings and potential tax benefits, it’s important to approach these opportunities with a clear understanding of the regulations and requirements. The information provided in this blog should be used as a general overview only and should not replace professional tax advice.
We will always recommend that prior to making any decisions for your business, please obtain detailed information and personalized advice by consulting a qualified tax professional.
Then once you have the full picture, reach out to one of our expert solar consultants who will be able to help you design a solution that meets your particular needs.
