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Yesterday the Federal Government passed legislation providing businesses with an additional tax deduction for eligible expenditure on training and digital technology. The details of the legislation have not changed from when it was announced in March 2022 and the Government has not extended the timeframe, meaning for technology investments, taxpayers only have another 7 days to take advantage of it. Below are the details from when we first reported the incentive in the March 2022 budget.
Small businesses with an aggregated annual turnover of less than $50 million will be able to deduct an additional 20 per cent of expenditure incurred (i.e. a deduction for 120%) on business expenses and depreciating assets such as portable payment devices, cyber security systems or subscriptions to cloud-based services that support their digital adoption up to an annual cap of $100,000 of expenditure.
The temporary increased deduction will be available for eligible expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and 30 June 2023.
The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.
The Government is introducing a skills and training boost to support small businesses to train and upskill their employees. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2024. Small businesses with aggregated annual turnover of less than $50 million will be able to deduct an additional 20 per cent of expenditure incurred on external training courses provided to their employees.
The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia. Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.
The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.
If you wish to discuss your eligibility and how to take advantage of the legislation, please be in contact with our team.
