Government announces Hydrogen Production Tax Incentive

On 14 May 2024, the Government announced its tax incentive strategy as part of the 2024–25 Budget to further boost the Australian hydrogen industry. This strategy highlights the federal government’s prioritisation of developing the hydrogen industry, including support for projects like Murchison Green Hydrogen.

One of the strategies included is a new green hydrogen subsidy in the form of a Hydrogen Production Tax Incentive.

This incentive is a temporary measure and offers a $2 incentive per kilogram of renewable hydrogen produced for eligible Australian corporations.

It will be applicable from 1 July 2027 and for up to ten years, until 30 June 2040. For projects to be eligible for the incentive, final investment decisions must be made by 2030. However, the refundable tax offset itself is uncapped with the federal government expecting a cost of approximately $6.7 billion in the medium term.

To find out more about the announcement and associated legislation, visit the Australian Tax Office’s website here.