Insights – 120% Tax Break Deduction for Technology and Training Boost
Finally the government has past the measure announced in the last budget in relation to allowing the 120% boost for technology and training.
Who can get this?
SME Businesses with aggregated turnover less than $50 million can for every $100 spent on training employees and digital technologies claim $120 as a tax deduction. So, in effect an extra 20% of the cost incurred is deductible.
Eligibility & claiming
Skills and Training Boost
The employee Skills and Training Boost to expenditure for SME business applies between 29/03/22 and 30/06/24. With the business able to start claiming the bonus deduction in the 2023 tax return for expenditure incurred between 29 March 2022 and 30 June 2022. For expenditure incurred on or after 1 July 2022, the 20% boost will be included in the income year in which it was incurred.
The training needs to be business related and consist of courses delivered by Australian registered external providers to employees in Australia or online (regardless of the employees’ location).
Unfortunately, this bonus does not apply to the following:
- Non-employee business owners being that of sole traders or partners in a partnership.
- In house training
- On the job training
Technology Investment Boost
The Technology Investment Boost to expenditure for SME business applies between 29/03/22 and 30/06/23. To be claimed in the 2023 tax return up to $100,000 annual cap on expenditure per each qualifying income year, or specified time period with a maximum deduction of $20,000.
Digital Technologies include business expenses and depreciating assets that support digital adoption.
This could include:
- Web design
- Cloud-based service subscriptions
- Cloud computing and accounting software
- Cyber security
- Portable payment devices
Under the existing taxation law, small business entities generally deduct a depreciating asset’s cost in one income year or over its effective life. The bonus deduction is equal to 20% of the asset’s cost regardless of the method of deduction that the entity adopts.
Eg Spend $100,000 GST Exclusive and claim that $100,000 plus a bonus of $20,000.
Examples of Possible Eligible Expenditure for Digital Enabling items
Computer and telecommunications hardware
- Digital tablets
- Desktop and laptop computers
- Computer keyboards
- Computer mouse, trackpads, stylus
- Computer cables
- Electrical and power adapters
- Repairs and improvement costs to computer hardware and equipment
Telecommunications hardware and equipment
- Mobile phones
- Landline phones
- Smart watches
- Telephone accessories
- Repair and maintenance costs
- Initial purchase
- Annual subscriptions (eg. accounting software subscriptions, Office 365, anti-virus, ServiceM8)
- Usage costs
- Connection costs
- Repair costs
- Subscriptions to support digital capabilities
- Help desk support fees and charges
- IT support charges
- Repairs and improvement costs
Digital media and marketing
- Audio and visual content creation
- Web page design
- Web page update costs
- Search engine optimisation fees
- Email marketing fees
- Photo stock fees
- Music royalty fees
- E-commerce website setup
- E-commerce website optimisation
- Setup of social media store functionality
- Costs associated with setting up online methods of payment
- Photography costs for online display
- Photostock fees
- Portable payment devices
- Digital inventory management
- Subscription to cloud-based services
- Advice on digital operations
- Cyber security consultant fees
- Cyber security software (eg. anti-virus)
- Cyber security installation and implementation costs
- Cyber security backup management
- Cyber security monitoring services
The late passing of legislation leaves little time for businesses to make the most of this – with only a couple of days left before the technology boost is set to end.
Should you have any questions about how this applies to your business- reach out to the team.
Author: Robyne Dole