Can I claim a home solar system on tax?
More and more people in the modern world are either working on a flexible agreement or starting their own business at home. This enables a better work-life balance, reduces overheads and limits our environmental impact by reducing the amount of commuting and driving. Unfortunately, this also means a greater load on the power grid, which in turn leads to higher bills.
Solar solutions are your best friend when you work from home – and there are ways you can even use them for tax purposes so you can reap the savings faster.
Take advantage of the instant asset depreciation schedule
If you run your business remotely, a solar system can be deducted from your EOFY taxes. A representative from the Australian Tax Office confirmed that an umbrella system is eligible under the immediate write-off program for $ 20,000 assets.
“The cost of a solar system is eligible for an immediate asset depreciation of $ 20,000 where the system costs less than $ 20,000 and is purchased from an eligible small business and used to generate electricity for corporate use,” said the representative said.
Not familiar with the Instant Asset Program? It is a hugely successful program introduced by the ATO that allows eligible companies to deduct the work-related portion of the cost of new or used depreciation. The limit is $ 20,000 and you can purchase multiple work-related items.
Remember, however, that you are not getting a full deduction here as you need to factor in the amount of electricity that is being used for budgetary reasons.
“If some of the electricity generated by the system is used for private purposes (e.g. in a home business), the cost of the system must be shared when requesting immediate asset depreciation,” the ATO representative said.
“A sensible apportionment method could be the ratio of the electricity used by the household to the electricity used by the company.”
What about people who work from home?
The instant asset depreciation program is great for businesses, but what about individuals? COVID-19 has accelerated flexible work arrangements, which means more home offices and more electricity bills.
So, can you claim any deductions for installing solar panels at home if you work there? Here the line starts to get a little blurry. Under the ATO rules, you can claim office costs such as computer equipment, telephone costs, heating, cooling and lighting, repairs and cleaning.
Occupancy costs such as mortgage payments, rent, prices and insurance cannot be deducted. The installation of solar panels is in the gray area between living and usage costs.
On the one hand, you improve your budget, regardless of your business. On the other hand, install it to reduce your energy consumption, which is considered acceptable.
In many cases like these, the ATO deals with these matters on a case-by-case basis. Energy Matters can assist you with this process and ensure that you receive every discount and discount that you are entitled to.
Just ask us Solar quoteor contact us toll free at 1800 EMATTERS today. You can also email our friendly team for competent, non-binding advice.