Are You a Small Business? Don’t Miss Out on Your 20% Bonus Deductions This 2023 Tax Year!

Announced as part of the 2022-23 Federal Budget, the Small Business Technology Investment Boost and the Small Business Skills and Training Boost measures became law on 23 June 2023.

So what does this mean?

As part of your 2023 tax return, you can claim a bonus 20% deduction on eligible expenditure you incurred during the period commencing 29 March 2022 to 30 June 2023. Details on the eligible expenditure you can claim under each Boost is outlined below.

Small Business Technology Investment Boost

What Can I Claim Under the Small Business Technology Investment Boost?

Expenditure you have incurred in your Small Business for the purposes of digital operations or digitising your operations can be claimed under this Boost. Examples of eligible expenditure includes, but is not limited to:

• Computer and telecommunication hardware and equipment and associated software;
• Internet costs;
• Systems and services that form and facilitate the use of computer networks;
• Digital media and marketing expenditure including audio and visual content and web page design;
• E-commerce expenditure including goods or services supporting online transactions, portable payment devices, digital inventory management and cloud based subscriptions (including your accounting platform); and
• Cyber security systems, backup management, and monitoring services.

The maximum bonus that can be claimed is $20,000 per income year, meaning you can claim up to $100,000 in eligible expenditure.

If the expenditure incurred was on depreciating assets (e.g. computer equipment), the asset must have been first used or installed ready for use by 30 June 2023.

What Cannot Be Claimed Under the Small Business Technology Investment Boost?

What cannot be claimed under the Small Business Technology Investment Boost includes:

• Salary and wages;
• Capital works costs;
• Financing costs;
• Training or education costs – refer below for info on Small Business Skills and Training Boost; and
• Expenses that form part of trading stock costs.

How Do I Make a Claim Under the Small Business Technology Investment Boost?

Your claim for the Small Business Technology Investment Boost can be made in your 2023 income tax return with your claim to include both the 100% deduction on eligible expenditure (up to $100,000) and the 20% bonus deduction.

Small Business Skills and Training Boost

What Is the Small Business Skills and Training Boost?

The Small Business Skills and Training Boost provides a bonus deduction for your business on eligible expenditure you incur to provide external training to your employees.

What Can I Claim Under the Small Business Skills and Training Boost?

Eligible expenditure for the Small Business Skills and Training Boost must meet the following criteria:

• the expenditure must be for training employees, either in-person in Australia, or online;
• it must be charged by a registered training provider that is not you or an associate of yours; and
• it must be incurred within the specified period for each income year.

The bonus is available on the provision of training for one or more employees in your business and may include incidental costs related to the provision of training provided they are charged by the training provider.

The training provider must meet certain registration criteria. You can check for registered providers at either the Australian Government’s Training website or the Tertiary Education Quality and Standards Agency website.

Unlike the Small Business Technology Investment Boost, the Small Business Skills and Training Boost does not have an annual cap.

What Cannot Be Claimed Under the Small Business Skills and Training Boost?

What cannot be claimed under the Small Business Skills and Training Boost includes:

• training of non-employee business owners such as sole traders, partners in a partnership or independent contractors; and
• costs added to an invoice by an intermediary on top of the cost of training, such as commissions or fees, as they are not charged directly or indirectly by the registered training provider.

How Do I Make a Claim Under the Small Business Skills and Training Boost?

Your claim for the Small Business Skills and Training Boost can be made in your 2023 income tax return with your claim to include both the 100% deduction on eligible expenditure and the 20% bonus deduction.

Contact Us for Support

Given the wide scope of eligible expenditure available to be claimed under each of the Boosts, it is likely that your small business will be able to claim some form of bonus deduction in the 2023 income year.

We encourage you to speak with your tax advisor or reach out to our team of specialists to ensure you maximise your bonus deduction this income year. For assistance, please contact our team by calling (03) 5221 6399 or emailing info@davidsons.com.au.

This article was written by Director Kylie McEwan.

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.