How to Maximise Tax Deductions on Your Business Solar System

Investing in solar for your business, including if you run it from home under an ABN, can offer more than just energy savings. If done right, it could also deliver thousands in tax deductions. Here’s how to structure your solar system installation to maximise your claim under current ATO guidelines legally.

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‍Top Tips to Claim Your Solar System on Tax

1. Use Two Separate Invoices

• Invoice 1: Solar panels, inverter, and install.
• Invoice 2: Battery system and install.
• Each must clearly itemise costs and be independently identifiable.

2. Ensure Each Asset Functions Independently

• Especially the battery system — it must be able to store and discharge energy without being dependent on the solar panels.
• If the battery is merely a component or can’t operate alone, it may not qualify as a separate asset.

3. Keep the Purpose Business-Focused

• To claim depreciation or instant asset write-off, your solar system and/or battery must be used wholly or primarily for business purposes.
• If your home is also your business base, you’ll need to apportion the usage (e.g. 50% business use = 50% claimable).

4. Stick to the Write-Off Thresholds

• For FY2023–24 and FY2024–25, each asset must be below $20,000 excluding GST to be eligible for the instant asset write-off.
• If solar and battery are separately invoiced and each falls under $20k, you can potentially claim both instantly.

5. Time Your Claim Right

• You can only claim when the asset is installed and ready for use.
• Merely paying a deposit doesn’t qualify you for deduction in that financial year.

Common Mistakes That Can Blow Your Claim

• Bundled Quotes or Invoices
  If the solar panels and battery are listed as one project, it’s likely the ATO will treat them as a single asset, making it harder to claim them separately.
• Single Contract or Payment Schedule
  A combined contract or invoice can disqualify you from splitting the deduction.
• Non-Functional Battery
  If the battery isn’t operational on its own, the ATO might classify it as a component — not a standalone asset.
• Marketing as a “Package”
  Avoid documentation that refers to your system as an "inseparable bundle". They need to be independent assets that can work independently.

How Much Can You Claim?

If eligible for instant asset write-off:

• You can deduct the full cost of the solar system in the same financial year it was installed.
• That means:
  • Solar system (e.g. $18,500 + GST) = $18,500 write-off
  • Battery system (e.g. $14,000 + GST) = $14,000 write-off
    → Total: $32,500 in potential tax deductions

Claiming from Home: What If You Run Your Business Under an ABN?

• You can still claim solar and battery systems if:
  • Your home is your principal place of business.
  • You apportion business use (e.g. a home office uses 40% of the energy).
• Only the business-use portion is deductible.
• Make sure to:
  • Keep energy use logs or use sub-meters to justify the business portion.
  • Ensure the system is used for business-related operations (computers, servers, machinery, etc.)

Final Tips for a Smooth ATO Experience

• Always get separate quotes and invoices for solar and battery.
• Confirm with your installer that the battery can operate independently.
• Get written confirmation of asset purpose and independent functionality if needed.
• Work with your accountant to structure the claim properly.

AusPac Solar can assist with all of these items here.

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‍Looking to install a solar system for your business? With the Federal Government Rebates currently, there's never been a better time to make the switch.

‍Our team can help guide you through an ATO-friendly installation — with clear documentation that maximises your deduction potential.

Enter your details below to get a quote and get your system installed this financial year to claim the instant asset write offs.
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FAQs: What Tax Incentives Are There with Solar?

1. What is the Instant Asset Write-Off?

The Instant Asset Write-Off allows eligible businesses to immediately deduct the full cost of assets, like a solar system, up to a certain threshold, rather than depreciating them over several years. This can significantly reduce your tax bill in the financial year the system is installed.

2. What Solar Rebates Exist?

Solar:
The primary rebate is the Small-scale Technology Certificates (STCs) program, which provides an upfront discount on solar panels based on your location and system size.
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Batteries:
After Labor's win in the Federal Election, they introduced the Cheaper Home Batteries Program, which is a Rebate enabling 30% of any solar battery up to 50 kWh to be claimed from the Government.
If you live in NSW or WA, your state Governments also have a Battery rebate available to claim on top of the Federal Rebate.

If you live on a property where you have multiple houses, you can claim all rebatesindividually per dwelling.

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3. What’s the Difference Between the Solar Rebates and the Instant Asset Write-Off?

There are two rebates you can claim. A Solar Panel Rebate and a Battery Rebate.

‍Solar Panel Rebate (STCs): A government subsidy that reduces the upfront cost of your system.
Battery Rebate: A 30% rebate on the cost of a battery with size eligibility up to 50 kWh
‍Instant Asset Write-Off: A tax deduction for the business purchase cost of eligible assets (like Solar & Battery systems, bought individually)

4. Can I Claim Both Solar Rebates AND the Instant Asset Write-Off?

Yes — they’re completely separate incentives. The rebate lowers your upfront cost, and the remaining amount (your out-of-pocket) can generally be claimed as a tax deduction under the Instant Asset Write-Off.

5. Can I Claim Solar Batteries Too Under the Instant Asset Write-Off?

Yes, if the battery is part of a business-related solar energy solution, it can be claimed. The ATO views batteries as eligible depreciating assets if used in your business operations.

6. Can I Claim the Instant Asset Write-Off if I Operate a Home-Based Business?

In most cases, yes — but you can only claim the portion of the system that’s used for business purposes. ATO rules require that you apportion costs correctly, so speak with your accountant for specifics.

7. Do I Need to Have the System Fully Installed by June 30 to Qualify for the Instant Asset Write-Off?

Yes. The system must be installed and ready for use in your business by June 30 to claim it in this financial year. Booking early is crucial to meet this deadline.

8. What Size System Should I Get to Maximise My Return?

It depends on your energy usage, business type, and budget. We recommend a tailored energy assessment to size your system for maximum savings, rebate value, and tax benefit eligibility. Speak to AusPac Solar.

9. What if I Need to Finance the System? Can I Still Claim the Instant Asset Write-Off?

Yes, you can typically claim the full amount as long as the asset is used for business and meets the eligibility rules.

10. Are There Different Rules for Sole Traders vs Companies?

Yes, the tax treatment can vary based on your business structure. Sole traders may need to apportion more carefully for personal use, while companies generally claim the full cost for business use. Your accountant can confirm what’s best for your structure.

11. What Happens if I Miss the June 30 Deadline?

You’ll miss the opportunity to claim the asset write-off in this financial year. However, you may still be eligible for solar rebates and other tax deductions in the next year — but the write-off rules may change. Acting before June 30 locks in current benefits.

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