What was announced?
The Federal Government has 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.
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. However, this is assuming the announced start dates are maintained if and when the legislation passes Parliament.
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.
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.
Some exclusions will apply, such as for in-house or on-the-job training and on external training courses for persons other than employees.
There are a few problems with this announcement, including:
- It is not a law yet
- Their is a Federal election coming up and we do not know the position of the opposition Government on this measure or if the measure will go ahead
- We are yet to see a draft legislation of this announcement
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.
There is still no further clarification around these announcements as of yet so we are unable to give you specifics on the exact technology and, skills and training that you can claim. We will update our clients as soon as we know more.