There were some announcements made in the 2022 federal budget (announced on 29 March 2022) to encourage expenditure on training and technology going forward. While these incentives are not yet law, you should be aware of what is in the pipeline. It is expected that the new government will adopt these measures and make them law. The process is under way and submissions on the new legislation only closed on 19 September 2022, so there is still a little way to go before it becomes law. The incentives work this way.
Small Business Technology Investment Boost
Small businesses with aggregated annual turnover of < $50M, will be able to deduct an additional 20% of the cost incurred on business assets and depreciating assets that support digital adoption, such as portable payment devices, cyber security systems, and subscriptions to cloud-based services. Businesses may continue to deduct expenditure that is ineligible for the bonus deduction under the existing tax law. An annual $100,000 cap will apply to each qualifying income year. Under current law, businesses can continue to deduct expenses in excess of $100,000. It will apply to expenditure incurred between 7.30pm on 29 March 2022 until 30 June 2023.
For eligible expenditure incurred between 7.30pm on 29 March 2022 and 30 June 2022 the following process applies:
- Claim the expense in the 2021/2022 tax return as usual; and
- Claim the additional 20% bonus deduction for this period in the 2022/2023 tax return.
For eligible expenditure incurred from 1 July 2022 until 30 June 2023, you can deduct the entire 120% in your 2022/2023 tax return.
Small Business Skills and Training Boost
Small businesses with an aggregated annual turnover of < $50M will be able to deduct an additional 20% of expenditure incurred on eligible training courses provided to employees. Businesses may continue to deduct expenditure that is ineligible for the bonus deduction in accordance with the existing tax law. It will apply to expenditire from 29 March 2022 until 30 June 2024.
As per the technology boost above, the expenditure incurred between 7.30pm on 29 March 2022 and 30 June 2022 can be claimed as follows:
- Claim the expense as usual on your tax return for 2021/2022; and
- Claim the additional 20% bonus deduction for this period in the 2022/2023 tax return.
The bonus deduction for expenditure incurred between 1 July 2022 until 30 June 2024 will be deducted in the income year in which the expenditure was incurred. Along with the expenditure itself.
We will keep you informed as to the status of this new legislation and when it receives Royal Assent. In the meantime, if you have any queries in relation to the incentive, don’t hesitate to contact your client manager.
Author – Michael Goodrick
*Correct as of 27 September 2022
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.
