In the 2022-23 Federal Budget, the former Government announced bonus business tax deductions on expenses for training employees or improving digital operations. On 29 August 2022, the Government announced that it will proceed with the Training and Technology boosts and the Treasury has released draft legislation.
These measures have been proposed but have not been passed as law yet.
The Skills and Training Boost allows small businesses to claim a 120% deduction for eligible expenditure incurred on external training for employees between 29 March 2022 and 30 June 2024. The expenditure must be:
- Deductible under any provision of the tax law
- For training employees
- Charged, directly or indirectly, by a registered training provider, for training within the scope of the provider’s registration
Exclusions apply, such as for in-house or on-the-job training, and expenditure on external training courses for people who are not employees. The training boost is not available for sole traders, partnerships, independent contractors who are not employees, or associates of the business including relatives or related entities.
The bonus deduction can only be claimed in the 2023 and 2024 tax returns. You can include eligible expenses incurred before 30 June 2022 in the 2023 tax return.
The Technology Investment Boost provides a 120% deduction for eligible expenses made to improve digital operations or digitise business operations. This can include the cost of depreciating assets. The boost is aimed to cover expenses made between 29 March 2022 and 30 June 2023, with a maximum bonus deduction of $20,000.
Broadly, the eligible expenditure for this measure can include:
- 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
For depreciating assets, the bonus deduction can only be claimed when the business continues to hold the asset beyond 30 June 2023, unless there is an involuntary disposal. The bonus deduction is claimed on the cost of depreciating assets regardless of whether deductions are claimed immediately or over time. Repair and improvement costs could also potentially qualify for the bonus deduction.
The following expenditure cannot qualify for the technology boost:
- Capital works costs under Division 43
- Financing costs such as interest expenses
- Salary or wage costs
- Training or education costs
- Trading stock or the cost of trading stock
The above information was accurate at time of publishing but please remember that these measures have not been passed as law yet and are subject to change.