For eligible small businesses, there’s a potential to claim a 20% bonus deduction on technology-related expenditures to digitise your operations.
Who might be eligible for the technology boost?
Businesses with an aggregated annual turnover of less than $50 million can avail of an additional 20% tax deduction to bolster their digital capabilities. This provision applies to eligible expenses incurred between 7:30 p.m. AEDT on 29 March 2022 and 30 June 2023. The maximum bonus deduction you can claim is capped at $20,000 per income year, with an overall limit of $100,000.
Eligibility Criteria
To benefit from this initiative:
- Your business should have an annual turnover below the $50 million threshold.
The tech-related expenditure should fall between the specified dates.
If the expense involves a depreciable asset, it should be operational by 30 June 2023.
Claimable Expenditures Include:
- Digital Infrastructure: Such as computer hardware, software, and internet costs.
- Digital Marketing: Including web design and audio-visual content creation.
- E-commerce Tools: Digital inventory management, online transaction tools, cloud services, and more.
- Cybersecurity Measures: Including systems, backup management, and monitoring services.
Please note that if an expense has a personal component, only the business-related portion is claimable. Additionally, deductions are calculated on the GST-exclusive amount for businesses registered for GST.
Non-Claimable Expenditures:
Certain expenses like salaries, capital works, financing, training, and trading stock costs are not eligible for this boost.
Additional Information:
R&D Tax Incentive: Businesses engaged in R&D can claim both the bonus deduction and the R&D notional deduction.
Not-For-Profit Organisations: Taxable entities meeting the criteria can benefit from this boost.
Claiming Period:
Typically, deductions are claimed in the year the expenses occur. Depending on your business’s financial year, you might fall into the early, normal, or late balancer categories. The majority, termed ‘normal balancers’, operate from 1 July 2022 to 30 June 2023 and will have the bonus claimed in the return.
20% Bonus Deduction for Employee Training
In addition to the technology boost, your business may also take advantage of the 20% bonus deduction for employee training.
The boost is available for expenses incurred from 7:30 pm AEDT on 29 March 2022 to 30 June 2024.
Eligibility Criteria:
- Your business should have an annual turnover of less than $50 million.
- The training should be for your employees, either in-person within Australia or online.
- The training provider should be registered (RTO) and not associated with your business.
- The expenses should be tax-deductible and incurred within the specified period.
What Can You Claim:
The bonus deduction covers training expenses for one or more employees. Incidental costs related to training, like books or equipment, are included if charged by the registered provider.
If your business is GST-registered and the training isn’t GST-free, the deduction is based on the GST-exclusive amount. The bonus deduction can be claimed upfront in the first available income year.
What You Can’t Claim:
Training for non-employee business owners.
Costs added by intermediaries, like commissions or fees.
Special Notes:
If you’re eligible for the R&D tax incentive, you can claim both the bonus deduction and the R&D notional deduction.
Taxable Not-For-Profit organisations can also claim this boost if they meet the requirements.
Claiming Period:
The eligible boost on expenses from 29 March 2022 to 30 June 2023 will be claimed in the 2023 return. Any boost on qualified expenses from 1 July 2023 to 30 June 2024 will be declared in the 2024 return.
We trust this information will be of value to your business. Should you have any queries or require assistance navigating this opportunity, please don’t hesitate to contact us. We’re here to support your business’s growth and success.
