Training and technology are often at the heart of a business’s success and may give them an edge to help them thrive in a competitive market. The Australian Government has recognised the importance of both of these concepts through the introduction of two initiatives to support small business, the Skills and Training Boost and the Technology Investment Boost.
Both initiatives allow business entities with an aggregated turnover of less than $50 million to access a further 20% deduction for eligible training and technology expenditure, and can apply to sole traders, partnerships, companies and trusts.
The Skills and Training Boost
The Skills and Training Boost applies to eligible expenses incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.
This further 20% deduction is only available for expenditure on external training courses that are provided by registered training providers to employees. You can check whether a training provider is registered by searching for them on training.gov.au.
The expenditure must meet the below criteria to qualify:
- The training can be provided to employees either in-person or online
- The training must be provided by a registered training organisation (RTO) that is not your associate or your own business
- The expenditure must already be an eligible deduction under Australian Taxation Law
- The expenditure must be incurred within the abovementioned dates
If your business is registered for GST, the bonus 20% deduction is calculated based on the GST exclusive amount.
You cannot claim expenses for training of non-employee business owners such as sole traders, partners in a partnership, or independent contractors. The fee must also have been charged directly from the RTO and not by an intermediary inclusive of additional commissions or fees.
There is no cap on the bonus deduction that can be claimed under the Skills and Training Boost.
The Technology Investment Boost
The Technology Investment Boost applies to eligible expenses incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2023.
There is a cap on the bonus 20% deduction that can be claimed under this initiative. It applies to total eligible expenditure of up to $100,000 per income year, meaning the maximum additional deduction available is $20,000 per annum for eligible entities.
The expenditure must meet the following criteria to qualify:
- The expenditure must already be an eligible deduction under Australian Taxation Law
- If the expense is incurred on a depreciating asset, it must be installed ready to use or first used by 30 June 2023. There may be exceptions for in-house software that is allocated to a software development pool.
- The expenditure must be incurred wholly or substantially for the purpose of digitising the operations of the entity or assisting the digital operations of the entity.
- It must be for business use. If it is a mix of private and business use, the expense must be apportioned.
If your business is registered for GST, the bonus 20% deduction is calculated based on the GST exclusive amount.
Items that may be able to be claimed should fit into the four categories below:
- Digital enabling items including computer hardware and equipment, telecommunications hardware and equipment, software, internet costs and systems and services that form and facilitate the use of computer networks.
- Digital media and marketing such as audio and visual content, web page design, web page updates, SEO fees, pay-per-click advertising, email marketing fees, photo stock commissions and music royalty fees.
- E-Commerce costs including goods and services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations.
- Cyber security expenses such as cyber security systems, backup management, monitoring services and upgrade services.
Subject to the criteria above, some of the more common eligible costs incurred by small business will be hardware costs, accounting software, app subscriptions, internet, web hosting and VOIP charges, IT support costs, and any social media or web based marketing.
Your accountant will be able to determine whether your entity, and the expenditure, is eligible for either of the above boosts and assist you in claiming the bonus deductions in your income tax return.
Author: Joanne Humphreys
Email: joanne@faj.com.au
