As part of the 2022–23 Budget, the then Government announced it would support small businesses through the Small Business Technology Investment Boost.
While this boost is not yet law, it proposes that eligible small businesses can deduct an additional 20% of the cost of expenses and depreciating assets that support ‘digital adoption’.
What is Small Business Technology Investment Boost?
Subject to law, small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of the expenditure incurred for the purposes of business digital operations or digitising its operations on business expenses and depreciating assets such as portable payment devices, cyber security systems or subscriptions to cloud-based services.
Businesses may continue to deduct expenditure that is ineligible for the bonus deduction under the existing tax law.
An annual $100,000 cap on expenditure will apply to each qualifying income year. Businesses can continue to deduct expenditures over $100,000 under existing law.
When the technology investment boost applies
This measure will apply to expenditures incurred in the period commencing from 7:30 pm AEDT 29 March 2022 until 30 June 2023.
According to the exposure draft legislation and associated explanatory materials, it is anticipated special rules will apply when the bonus deduction can be claimed in tax returns depending on a business’s balancing date.
What a business expenditure may include
A business expenditure may include, but is not limited to:
- Digitally enabling things– The hardware, software, systems, and services used in computer and telecommunications networks to create and make them easier to use.
- Digital media and marketing– Audio and visual content that you produced, accessed, stored, or viewed on digital devices.
- E-commerce– Facilitating digitally-ordered or platform-enabled online transactions.
Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria.
The bonus deduction is not intended to cover general operating costs relating to employing staff, raising capital, the construction of the business premises, and the cost of goods and services the business sells. The boost will not apply to:
- Assets that are sold while the boost is available
- Capital works costs (for example, improvements to a building used as business premises)
- Financing costs such as interest expenses
- Salary or wage costs
- Training or education costs
- Trading stock or the cost of trading stock
How to claim the technology investment boost
For eligible expenditure that was incurred between 7:30 pm AEDT on 29 March 2022 to 30 June 2022, you can:
- claim the expenditure as usual in your 2021–22 tax return, and then
- claim the additional 20% bonus deduction in your 2022–23 tax return for this period.
For eligible expenditures incurred from 1 July 2022 until 30 June 2023:
- you can deduct the entire 120% in your 2022–23 tax return.
How can we help you with the boost? Please get in touch with our tax consultant on (02)8090 2449 at W Wen & Co.
Reference: ATO website