Small Business Boost to Skills and Technology

The Federal Government has put the Technology Investment Boost and the Skills and Training Boost incentives, back on the table as draft legislation. While the legislation still has not been passed, business can start planning around these measures and all expenditure and start considering their impact for tax time.

The bonus component of eligible expenditure relating to the 2022 financial year (incurred from March 29, 2022, through to June 30, 2022) will be claimable in the 2023 income tax returns. There is no need to for business owners to stress about amending returns or holding off lodging returns for the 2022 financial year.

Small businesses with an annual turnover of less than $50 million will have access to the incentives until 30 June 2024.

Eligible skills and training expenditure

To be eligible for the Skills and training bonus deduction, the expenditure must be:

• Incurred on external training delivered to employees of the business by registered providers.

• Fully deductible under another provision of a taxation law, whether in, or wholly in, the income year in which the expenditure is incurred.

• Training expenditure can include incidental costs such as books or necessary equipment but cannot include commission or fees charged by intermediaries.

It should be noted for GST registered entities that the value is calculated off the GST exclusive value.

To be eligible for the bonus training, providers must also be registered with one of the four Government Bodies. 

• Australian Skills Quality Authority

• Tertiary Education Quality and Standards Agency

• Victorian Registration and Qualifications Authority

• Training Accreditation Council of Western Australia

The training must be within the scope of the registered training provider’s registration at the time the expenditure is incurred. Its also important to note that training can be in person or online. However cannot be on-the-job and in-house training and must only relate to the organisation employees.

This means that the following will be ineligible:

• Sole traders

• Individual partners in a partnership and

• Independent contractors

• Beneficiaries of a trust (where no employee relationship exist)

Taxpayers can claim the bonus deduction in their 2023 tax return in respect of expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and the end of their 2021-22 income year, as well as expenditure incurred in the 2022-23 income year.

Eligible technology expenditure

• 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

• E-commerce – supporting digitally ordered or platform enabled online transactions

Specifically excluded expenditure

• Salary or wage costs

• Capital works costs that are deductible under Division 43 of the Income Tax Assessment Act 1997

• Financing costs, including interest, payments in the nature of interest and expenses of borrowing

• Training or education costs

• Expenditure incurred that forms part of, or is included in, the cost of trading stock

Expenditure on depreciating assets

It is proposed that eligible expenditure on expenses and assets will:

• Excludes Polled Software

• Exclude assets subject to a balancing adjustment in the relevant period

• Include repairs and improvement costs where costs are incurred in the relevant period.

• If the expenditure is for a mix of business and private use, the bonus deduction is available only to the proportion of the business expenditure

• The bonus deduction will be equal to 20 % of the cost of an eligible depreciating asset that is used for a taxable purpose. Regardless of whether the asset is fully expensed under the temporary full expensing regime, or a deduction is claimed for the asset’s decline in value over its effective life under the uniform capital allowance regime.

When is the technology boost claimed?

The technology boost is proposed to apply to eligible expenditure incurred from the budget announcement until 30 June 2023. An annual cap will apply so that expenditure only up to $100,000 will be eligible for the boost, with the bonus deduction capped at $20,000 per year.

Summing up

Even though the technology and skills boost are not claimable until June 2023, it’s crucial to plan ahead. It’s essential to have a good understanding on maximising these deductions for your business and ensure that relevant documents are prepared around the expenses incurred in the 2022 financial year.

Contact Oracle Accounting & Tax Advisers team to assess your current position and help you maximise these deductions for your business.

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.