Eco-buildings eligible for tax breaks starting July 2011

Beginning July 1, 2011, buildings that make the necessary changes to cut down on energy consumption will be eligible for a one-off bonus tax deduction worth 50 percent of the cost of the eligible eco-assets or capital works.

To qualify, buildings must improve energy efficiency ratings from 2 stars or lower to 4 stars or higher under the National Australian Built Environment Rating System. The tax break program will be applicable from July 1, 2011 to June 30, 2015.

The Tax Breaks for Green Buildings initiative is aimed at pushing businesses to achieve the country’s emissions reduction targets. It will also help increase demand for jobs specializing in the eco-industry. The program will also cover selected hotels and shopping centers wanting to renovate to be more environmental friendly.

The tax break works as a bonus tax deduction in the income year in which the taxpayer receives certification that the project has achieved the required energy efficiency improvement. Moreover, the scheme is an offshoot of the Building Energy Efficiency Disclosure Act and is aligned with the government’s promise to support green initiatives through a US$30 million in 2010-11 for the Green Building Fund, which allows grant funding for buildings.

The total cost of this tax break package is estimated at US$180 million over the forward estimates, and around US$1.0 billion out to 2018-19. Funding over the forward estimates has already been provided for in the Budget through the Renewable Energy Future Fund.