What are these boosts and what do they do?
Both the Technology Investment Boost and the Skills and Training Boost are designed to give small businesses the ability to deduct an additional 20% of the expenditure incurred by the business for the purposes set out under these two boosts.
In the case of the technology investment boost, this is technology expenditure incurred for the purposes of helping the business digitise operations and can include digital migration costs, depreciating assets such as computers or portable payment devices, cyber security systems or subscriptions to cloud based services.
For the skills and training boost, this is expenditure incurred for the provision of eligible external training courses to their employees by registered Australian providers.
What businesses can access it?
To access the boosts you need to be a small business with an aggregated turnover of less than $50 million for the income year in which you incur the expenditure.
Should you not meet the turnover test in the year the expenditure was incurred, our understanding of how the turnover tests apply will extend to both:
- the year prior to the expenditure being incurred; and
- estimated turnover for the current year.
Technology Investment Boost: The details
As previously mentioned, the Technology Investment Boost applies to expenditure incurred by small business to support their digital operations and digitise their operations. The categories defined for what constitutes eligible expenditure are surprisingly broad and include:
- digital enabling items (including equipment, software, internet costs and services)
- digital media and marketing
- e-commerce (including subscriptions, advice on digital tools and growth, goods and services supporting digitally ordered or platform enabled transactions)
- cyber security
Expenditure meeting the above eligibility needed to be incurred and ready for use between 7:30pm 29 March 2022 and 30 June 2023.
The boost is capped at $100,000 (exc. GST) of expenditure per income year. This means a maximum bonus deduction of $20,000 a year can be applied ($40,000 in total) and both years can be applied against the 2023 tax return.
Whilst the period the boost applies has already finished, you may be surprised just how much eligible expenditure your business has incurred during the eligible period.
Example: ABC Pty Ltd, a small business, upgraded their servers and computer systems in April 2022 for a total cost of $110,000 (exc. GST). The company also incurred in relation to the 2023 year a total of $35,000 (exc. GST) on supporting their digital operations including various cloud and e-commerce subscriptions, digital marketing and their internet costs.
Therefore in its 2023 tax return, ABC Pty Ltd can claim $27,000 as a bonus deduction. This is made up of:
- $20,000 in relation to 2022 (being 20% of the maximum cap for the year as expenditure exceeded the cap)
- $ 7,000 in relation to 2023 (being 20% of the eligible expenditure incurred)
Skills and Training Boost: The details
As mentioned earlier the Skills and Training Boost applies only to expenditure incurred for the provision of eligible external training courses to your employees by registered Australian providers. Eligible expenditure under this boost must be:
- for the provision of training to employees of your business
- charged by a registered external training provider
- already deductible for your business under tax law (this also stands for the Technology boost but the risk of non-deductibility is much higher for training)
This is much more limited than what is included under the Technology Investment Boost but the good news is twofold:
- there is no cap for eligible expenditure under the Skills and Training Boost
- the boost is eligible for an additional 12 months (between 7:30pm 29 March 2022 and 30 June 2024).
How we can help
The potential additional deductions your business can access utilising these boosts when preparing your 2023 income tax return can add up to a sizeable amount.
If you’re wondering how these boosts can assist your business, or if expenditure you’ve incurred is eligible, please don't hesitate to have a talk with us at BLG Business Advisers. Our team are here to help you.
We wish you and your business every success!