Readers ask: Can solar be claimed under $20k write-off?

Solar installations have soared in popularity across Australia, as skyrocketing energy prices and increasing awareness of our environmental impacts cause businesses and households to look for more sustainable and cost-effective alternatives.

Yet they don’t come cheap, costing thousands of dollars for a small, basic system.

Melbourne firm Natures Organics recently turned on a massive system spanning 17,000 sqm on the roof of its factory, at a cost of $3 million.

So it is not surprising that small businesses want to know whether such systems count as an asset under the $20,000 instant write-off scheme, and as such, whether they can receive an immediate tax break on the installation cost.

Yes, it can be deducted

A spokesperson for the Australian Taxation Office confirmed to My Business that solar power systems are eligible for the tax break, provided it is legitimately used for business.

“The cost of a solar power system can be claimed under the $20,000 instant asset write-off where the system costs less than $20,000 and it is bought and used by an eligible small business to generate electricity for use in the business,” the spokesperson said.

“Where a portion of the electricity generated by the system is used for private purposes (for example, in a home-based business), the cost of the system must be apportioned when claiming the instant asset write-off.

“A reasonable method of apportionment could be the ratio of electricity consumed by the household compared to the electricity consumed by the business.”