As part of the 2022 Federal Budget, it was announced that small business entities would be entitled to a full deduction PLUS an additional 20% bonus deduction in relation to eligible technology, skills, and training expenditure.
Totalling a 120% deduction, a spend cap of $100,000 per annum will be applied to technology, however no cap would apply to skills and training expenditure.
Businesses should understand that not only is the cost of the technology eligible for the bonus deduction, but you can also apply this to any training required for the new technology.
It must be noted that these are proposed measures that have not been passed as legislation at the date of writing. Since the announcement of these incentives, there has been a change of government. The ATO still has a summary that contains this information published on their website.
The Government’s Technology Investment Boost is designed to reduce the cost of moving to a digital platform, by supporting businesses to invest more in their digital capability. The Government Skills & Training Boost has been designed to encourage small businesses to train new staff and upskill existing staff, helping them to be innovative and grow.
Until the legislation is presented, we do not have further details of what might be eligible expenditure outside of what is contained in this article.
Small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as:
- Portable payment devices,
- Cyber security systems, or
- Subscriptions to cloud-based services.
Businesses may continue to deduct expenditure that is ineligible for the bonus deduction under the existing tax law.
Unfortunately, no further detail is available at this time on just what technology is eligible for this claim until the Government can present the legislation. This will not happen until after the election.
An annual $100,000 cap will apply to each qualifying income year. Businesses can continue to deduct expenditure over $100,000 under existing law.
Skills & Training
Small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on eligible training courses provided to employees.
The courses must be external training courses delivered to employees in Australia or online, by providers registered in Australia.
Businesses may continue to deduct expenditure that is ineligible for the bonus deduction in accordance with the existing tax law.
Application & How to Claim
If legislated, the Technology measure will apply to expenditure incurred in the period commencing from 7:30 pm AEDT 29 March 2022 until 30 June 2023.
The Skills & Training measure goes for an additional year to 30 June 2024.
For eligible expenditure incurred between 7:30 pm AEDT, 29 March 2022 until 30 June 2022:
- Claim the expenditure as usual in your 2021–22 tax return, and
- Claim the additional 20% bonus deduction for this period in your 2022–23 tax return.
For eligible expenditure incurred from 1 July 2022 until 30 June 2023:
- You can deduct the entire 120% in your 2022–23 tax return.
For eligible expenditure incurred from 1 July 2023 until 30 June 2024:
- You can deduct the entire 120% in your 2023–24 tax return
How RSM’s Digital Advisory team can help
If you would like to review your current business technology to see how you can improve efficiencies, produce better data or simply see if you can work smarter, contact Digital Advisory for an initial complimentary discussion. We can then plan a Discovery Session that targets the issues that are top of mind for you.
RSM offers subscription resale via our Cloud Club® by RSM service. We offer discounts on a range of solutions from accounting software to accounts payable automation, inventory management and point of sales, and more. Our clients receive 10% off RRP at a minimum.