The government is helping small and medium enterprises with an aggregated turnover of less than $50 million to reinvigorate their businesses after the effects of the pandemic.
Announced in the 2022-23 Budget and still subject to law, the proposed investment boosts will allow businesses to invest in technology upgrades and staff training, and receive an additional bonus deduction of 20% (totalling 120%) on the expenses incurred.
The two investment boosts are the:
- Small Business Technology Investment Boost
- Small Business Skills and Training Boost
Small Business Technology Investment Boost
The Technology Investment Boost (TIB) aims to help small businesses adopt digital technologies and support digital operations. The additional deduction of 20% is also available for eligible expenses incurred on depreciating assets to support these upgrades.
The TIB is capped at A$100,000 for eligible expenditure per income year with a maximum bonus deduction of $20,000.
The TIB bonus deduction will be available for eligible expenditure incurred from 7:30pm AEDT 29 March 2022 until 30 June 2023.
To be eligible, expenditure must meet these criteria:
- The expense must be eligible for deduction (for example salary and wages, capital works costs, financing costs, or expenditure that forms part of or is included in the cost of trading stock will not be eligible).
- The expenses must be normally deductible in line with the businesses’ ordinary operations
- If the expenditure is on a depreciating asset, the asset must first be used or installed ready before 1 July 2023.
Additionally, the expenditure must be wholly or substantially for the business’ digital operations or for digitising its operations, such as (but not limited to):
- Digital enabling – computers and telecommunications hardware, software and services that form and facilitate the use of computer networks.
- Digital media and marketing – digital devices that aid in creating, accessing, storing, or viewing audio and visual content, including web page design.
- E-commerce – goods and services supporting online transactions for a business, including cloud-based services, portable payment devices, and advice on digital tools to support business continuity and growth.
- Cyber Security – Systems, backup management and monitoring services.
Small Business Skills and Training Boost
The Skills and Training Boost (STB) aims to help small businesses train new or upskill existing staff. The STB will allow businesses to claim an additional 20% on the cost of external training courses provided to staff in Australia.
There is no expenditure cap to the STB, and the bonus deduction will be available for eligible expenditure incurred from 7:30pm AEDT 29 March 2022 until 30 June 2024.
For expenditure to be eligible, it must meet the following criteria:
- The expenditure must be for external training of staff in person in Australia or online (regardless of where the employee is based).
- The training must be charged to and undertaken by a registered training provider within the scope of the provider’s registration.
- The registered training provider must not be associated with the small business in any way.
- The expenses must be normally deductible in line with the businesses’ ordinary operations
- Enrolment for the training must have occurred after 7:30pm AEDT 29 March 2022, up to 30 June 2024.
The STB is not available to:
- Sole traders, partners in a partnerships or independent contractors (who are not themselves an employee).
- Those not carrying on a business, or without employees
- Those businesses with an aggregated turnover over $50m
- A business that receives the training from an associate – i.e., a relative, spouse or partner of an entity or person, a trustee of a trust that benefits from the business, and a company that is sufficiently influenced by an entity or person, cannot be the registered training provider providing the training to the business.
While neither investment boost is currently law, once passed eligible expenses incurred from 7:30pm AEDT 29 March 2022 until 30 June 2024 should be available to claim.
If you wish to discuss how this may impact you, your business, or your employees, feel free to reach out to Nexis today.
