Millions of small and medium-sized businesses are set to benefit from a federal government tax incentive to cut their energy bills.

Laws to enact the tax incentive will go to parliament on Wednesday.

The tax deduction will provide businesses with annual turnover of less than $50 million an additional 20 per cent deduction on spending on assets that support electrification and more efficient use of energy.

The incentive will cover electrifying heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.

Eligible assets or upgrades will need to be first used or installed ready for use between July 1 this year and June 30, 2024.

It will cost the federal government $314 million over the next four years.

“The small business energy incentive is all about helping small businesses share in the benefits and opportunities of the energy transition that’s under way in our economy,” Treasurer Jim Chalmers said.

Dr Chalmers’ office said up to 3.8 million small and medium-sizes businesses could benefit through the scheme.

The incentive has the backing of a number of groups, including the Property Council of Australia and the Energy Efficiency Council.

Paul Osborne
(Australian Associated Press)