SPONSORED CONTENT: Energy-smart ways to use the EOFY instant asset write-off

Lighting, heating, and ventilation and cooling (HVAC) systems typically consume the most energy in a small business.

Wanting to help cut down your workplace energy bills and reduce your carbon footprint? The EOFY instant asset write-off could help.

There’s less than a month to go before the end of financial year (EOFY) and the close of the 2018-19 instant asset write-off. Considering that annual energy bills are a necessary cost for small businesses, EOFY is a great opportunity for business owners to upgrade old equipment with energy-efficient alternatives.

Not only are they more environmentally friendly, they can also lower business expenses by reducing your running costs.

Choosing energy-efficient equipment

Lighting, heating, and ventilation and cooling (HVAC) systems typically consume the most energy in a small business, with HVAC alone accounting for 40-50 per cent of a commercial building’s energy use every year.

On a smaller (but still noteworthy) scale, pump or boiler systems, refrigerators and computer monitors are renowned energy guzzlers – and they’re just the key culprits in a standard office; depending on the nature of your business, there are all kinds of other appliances contributing to your operational costs.

There are a few ways you can get an idea of which appliances and devices are using the most electricity. You can look at the usage data on your bills for a 12-month period and determine the times when your usage typically peaks and identify the appliances and equipment that were in use at those times.

There are also energy monitoring devices that you can purchase if you want to regularly deep dive into your office’s energy usage data. Alternatively, you can arrange an audit with an energy consultant, which the NSW Government recommends for businesses with annual energy bills over A$5000.

Once you’ve identified the appliances that are the main contributors to your power bill, you can find environmentally friendly alternatives by checking the Energy Rating Label found on common appliances.

Products are given a star rating to determine their energy efficiency relative to other models of the same size. More stars mean greater efficiency. While appliances with higher star ratings might cost more up front, they can deliver significant savings over time.

For example, if you were using a one-and-a-half-star reverse-cycle split system air conditioner (8kW), you might pay A$640 a year in running costs to heat a 60m2 room. If you upgraded to a four-star model, you could possibly pay A$440 over the same period (these figures are approximate). 

Claiming the instant asset write-off

If you decide to take advantage of the instant asset write-off, make sure your claims qualify.

On 6 April 2019, legislation was enacted to increase the instant asset write-off threshold to A$30,000 for the period from 7.30pm on 2 April 2019 until 30 June 2020.

During this timeframe, businesses with annual turnover under A$50 million can purchase new or second-hand assets and claim the deductions in their tax returns – though it’s important to note that the equipment must first be used – or installed and ready to use – in the income year you’re claiming for.

While you can buy multiple assets and qualify for the instant asset write-off each time, the cost of each individual asset must not exceed the A$30,000 threshold. If an asset costs more than A$30,000, the business can't claim a deduction immediately, explains a spokesperson for the Australian Taxation Office (ATO). 

“They can continue to deduct these over time, using the small business pool or the general depreciation rules, depending on their turnover,” the spokesperson says.

“Additionally, businesses should remember that the deduction is limited to the percentage the asset is used for business purposes. Businesses cannot claim a deduction for the portion of the asset used for private purposes.”

An investment in energy-smart appliances this EOFY can benefit your business now and in future years too.

While you’re upgrading, or if you’re just thinking of switching providers, speak to an AGL representative about energy deals for your small businesses.

AGL has business energy offers for CPA Australia Members that can be found here or call: 1300 001 540 and quote ‘CPA’.

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October 2021
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