Tax Breaks for Green Buildings



Using depreciation as a way to encourage the greening of the build environment has been a hot topic for a number of years. During the recent federal election the Labor party announced policies that included the delivery of such incentives.

Last week via their web site Labor provided a little more flesh to their approach in this area.

We outline the salient details below:

  • Scheme starts from 1 July 2011 – 30 June 2015.
  • Applies to Retro-fits of existing buildings.
  • Applicable to buildings 2 Star NABERS rating or lower looking to achieve 4 stars or higher.
  • Available for Office buildings, Hotels and Shopping Centres.
  • Provides a 50% increase in deductions over the life of eligible assets.
  • Anticipated cost $1bn.

How does it work?

  • The scheme will run in the same manner as the recent investment allowances scheme.
  • From the 1 July 2011 applications will need to be made to the Government for review and approval prior to any works taking place.
  • NABERS assessments will be required before the works commence.
  • Upon completion of the works 12 months will need to pass to enable a post construction NABERS assessment to be completed.
  • Application with results will need to be submitted to the Government for approval.
  • Claim for depreciation may be made with approval in that year accounts.
  • Depreciation claims that would otherwise be available can be claimed from the date of practical completion.

The Good

  • Fairly generous deduction available given the scale of likely expense to achieve a two star rating increase.

The Uncertain

  • This is a proposal and not final legislation.
  • There is no current indication what assets will be considered eligible for the 50% allowance.
  • The $1bn may be capped by the Government so fewer projects may be eligible.
  • How the Government will effectively assess applications.
  • Likely to take 3 – 4 years before the incentive reaches owners returns.

Napier & Blakeley’s head of sustainability Roger Walker is one of the members of the committee reviewing the assets that will be included within the scheme.

Napier & Blakeley will keep you informed as more information comes to light. In the mean time should you wish to discuss the above article or any other matters relating to Sustainability or Tax Depreciation please does not hesitate to contact us at Napier& Blakeley.

NSW / ACT / WA / NZ  -  Roger Walker, Alastair Walker -  02 9299 1899
VIC /  SA  / TAS  -  Peter Frith, Rob Howells -  03 9915 6300

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