What was announced?
In the 2022-23 Budget, the Federal Government at the time announced two ‘Investment Boosts’ that are available to small businesses with an aggregated annual turnover of less than $50 million in the 2022-23 Federal Budget. The boosts will allow businesses to claim a 120% deduction for expenditure on training and technology costs.
This proposal has now been adopted by the current Government and details were released in a recent exposure draft by Treasury.
The Skills and Training Boost is intended to apply to expenditure from Budget night (29 March 2022) until 30 June 2024. Businesses, however, will not be able to claim deductions and the 20% boost from 29 March 2022 and 30 June 2022 until the 2023 tax return.
The Technology Investment Boost is intended to apply to expenditure from Budget night (29 March 2022) until 30 June 2023. As with the Skills and Training Boost, the additional 20% deduction for eligible expenditure incurred by 30 June 2022 has to be claimed in the 2023 tax return.
The 20% boost for eligible spending performed on or after 1 July 2022 will be included in the income year in which the expenditure is incurred.
Technology Investment Boost
The Technology Investment Boost will involve a 120% tax deduction for small business expenditure 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.
Note: It will be capped at $100,000 per annum.
To be eligible for the bonus deduction:
- The expenditure must be eligible for deduction (salary and wage costs are excluded for the purpose of these rules)
- The expenditure must have been incurred between 7.30pm (AEST), 29 March 2022 and 30 June 2023
- If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use by 30 June 2023.
To be eligible, the expenditure must be used wholly for the entity’s digital operations or digitising its operations. For example:
- digital enabling items – computer and telecommunications hardware and equipment, software, systems and services that form and facilitate the use of computer networks;
- digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices; and
- e-commerce – supporting digitally ordered or platform enabled online transactions.
Note: Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria.
The boost will not apply to:
- Assets that are sold while the boost is available
- Capital works costs (for example, improvements to a building used as business premises)
- Financing costs such as interest expenses
- Salary or wage costs
- Training or education costs
- Trading stock or the cost of trading stock
Skills and Training Boost
The Skills and Training Boost will involve a 120% tax deduction for small business expenditure on external training courses provided to employees. External training courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.
To be eligible for the bonus deduction:
- The expenditure must be for training employees, either in-person in Australia, or online
- The expenditure must be charged, directly or indirectly, by a registered training provider and be for training within the scope (if any) of the provider’s registration
- The registered training provider must not be the small business or an associate of the small business
- The expenditure must be deductible
- Enrolment for the training must be on or after 7.30pm, 29 March 2022.
Some exclusions will apply, such as for in-house or on-the-job training and on external training courses for persons other than employees.
The training boost is not available to:
- Sole traders, partners in a partnership, or independent contractors (who are not employees)
- Associates of the business such as a relative, spouse or partner of an entity or person, a trustee of a trust that benefits an entity or person and a company that is sufficiently influenced by an entity or person.
What happens if I have already spent money on training and technology in anticipation of the bolstered deduction?
If the measure becomes law, and the start date of the measure remains the same, it is expected that any qualifying expenditure incurred in the 2021-22 financial year will be claimed in your tax return. But, it is expected that the 20% boost will not be claimable until the 2022-23 financial year.