The Small Business Technology Investment Boost and the Small Business Skills and Training Boost incentives are measures that will benefit small businesses with an aggregated annual turnover of less than $50 million.
Tech upgrades and digital skills training are the key points of the 2022–2023 federal budget, and small businesses with a digital skills gap and little to no digital presence will benefit the most.
Australia’s small and medium enterprises (SMEs) play a significant role in Australia’s economy and employment. However, statistics show that they are still struggling to keep up with technological changes and need better connectivity options to operate effectively with technology.
The Tax Incentives for Digital and Tech Investment Boost
Any Australian company with an annual turnover rate of below $50 million per annum is eligible for the 20 per cent “bonus” tax deduction (for eligible expenditure on external training of employees by providers registered in Australia) until 30 June 2024. Moreover, they will also have access to a bonus 20 per cent deduction that will support the uptake of digital technologies until 30 June 2023.
So, how does this work in the real world?
Let’s say a small business spends on training their employees; the company will get a $120 tax deduction for every hundred dollars. Or a company invests in a digital marketing strategy, a website redesign, and tools for remote employees that presumably cost $30,000. With the Technology Investment Boost, the company can claim an extra $6,000 in deductions ($30,000 plus the 20% bonus).
And what can’t SMEs claim?
Some exclusion will apply, such as…
- Spending on in-house or on-the-job training by businesses.
- Business expenditure on external training courses for people other than employees.
Technology Investment Boost
The Technology Investment Boost will support digital adoption by small businesses (with an aggregated annual turnover of less than $50 million) by providing a bonus 20 per cent tax deduction for eligible expenditure incurred on expenses and depreciating assets that support digital operations, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services. Take note that an annual $100,000 cap will apply to each qualifying income year, so businesses can continue to deduct expenditures over $100,000 under existing law.
How to claim
The boost will apply to expenditure incurred in the period commencing from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023 and can be claimed as usual in the 2021–22 tax return, and an additional 20% bonus deduction can be claimed for this period in your 2022–23 tax return. The company can deduct the full 120% of eligible expenditures incurred from 1 July 2022 until 30 June 2023, on their 2022-23 tax return.
Skills and Training Boost
The Skills and Training Boost will provide small businesses (with an aggregated annual turnover of less than $50 million) with access to a bonus 20 per cent tax deduction for eligible expenditure incurred on external training delivered to their employees by providers registered in Australia.
How to claim
The boost will apply to eligible expenditure incurred in the period commencing from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2024 and can be claimed as usual in the 2021–22 tax return, and an additional 20% bonus deduction can be claimed for this period in your 2022–23 tax return. The company can deduct the entire 120% of eligible expenditure incurred from 1 July 2022 until 30 June 2023 in their 2022-23 tax return; for eligible expenditure incurred from 1 July 2023 until 30 June 2024, the company can deduct the entire 120% in their 2023-24 tax return.
What else do I need to know?
To be eligible for the bonus or tax breaks for the two investment boosts, the expenditure must have a direct link to the business’ digital operations, such as…
- E-commerce (online transactions that can be ordered digitally or through a platform)
- Digital media and marketing content created, accessed, stored, or viewed on digital devices
- Computer and telecommunications hardware and equipment, software, systems, and services that help to form and use computer networks
The government is consulting and seeking stakeholders’ views on exposure draft legislation and accompanying explanatory materials implementing this measure. You can submit your responses to this consultation up until 19 September, 2022 to SkillsBoost@treasury.gov.au and TechBoost@treasury.gov.au.
Source: Further details will be released, so make sure to check the official info page here – Small Business Technology Investment Boost and Small Business Skills and Training Boost
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