Australian Small Businesses are set to take on the digital world in 2022-23 with the Federal Budget’s new tax deductions.
The two policies offer small businesses with an aggregated annual turnover less than $50 million an extra 20% tax deduction on tech upgrades and digital skills training.
Designed to encourage small business investment and help with competing in the growing digital economy.
Everything you need to know about the two policies
Small Business Technology Investment Boost
For every hundred dollars invested in new technology will recieve a $120 tax deduction.
This could possibly include
- cyber security
- web design and upgrades
- cloud computing
- portable payment devices
- new laptops
- cloud based subscription services
Deductions are capped at $100,000 annually and will be in effect from 7:30pm March 29, 2021 until June 30, 2023*
Small Business Skills and Training Boost
For every hundred dollars spent on external digital skills training for staff, small businesses will recieve a $120 tax deduction.
Budget documents state that “external training courese will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.”
In-house training is excluded, and there is also suggestion that sole traders wishing to upgrade their own digital skills via external training also won’t be eligible for the extra 20% deduction.
No spending cap has been listed so far, and the deduction will be in effect from 7:30pm March 29, 2021 until June 30, 2024*
Here’s how you can claim:
To claim the bonus on purchases made between Budget night and the end of the 2021-2022 financial year, small businesses need to submit a normal expenditure claim first. The bonus 20% will only be applied in the 2022-2023 financial year.
Eligible expenditure made in the 2022-2023 financial year will be treated differently. Small businesses will be free to “deduct the entire 120% in your 2022–23 tax return,” the ATO said.
The 120% deduction will be available under the skills package in the 2023-2024 financial year, too.
Read the official Media Release
* As at 4th April 2022, these policies have not yet passed formal legislation.
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