Small Businesses Set to Benefit from Proposed Budget Measures
As part of the 2022–23 Budget, the Government has unveiled measures to support small businesses, pending the enactment of the law. These initiatives aim to provide additional incentives for small businesses in the areas of technology investment and skills training.
Small Business Technology Investment Boost
Under the proposed legislation, small businesses with an aggregated annual turnover of less than $50 million will be eligible for an extra 20% deduction on expenditure incurred for business digital operations or the digitization of their operations. This deduction will apply to business expenses and depreciating assets, such as portable payment devices, cybersecurity systems, and subscriptions to cloud-based services.
It’s important to note that businesses can continue to deduct expenditures that are ineligible for the bonus deduction under existing tax laws. Further details on eligible expenses will be provided once the law is passed. Additionally, an annual cap of $100,000 will apply to qualifying expenditure in each income year, while expenses exceeding $100,000 can still be deducted under existing law.
Small Business Skills and Training Boost
Subject to the passage of the law, small businesses with an aggregated annual turnover of less than $50 million will enjoy an additional 20% deduction on eligible external training courses provided to their employees by registered providers in Australia. Expenditures that do not meet the criteria for the bonus deduction can still be deducted in accordance with existing tax laws.
Effective Dates and Special Rules
The technology investment boost will apply to expenditure incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2023. As for the skills and training boost, it will be applicable to expenditure incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.
It’s worth noting that special rules are expected to govern when the bonus deductions can be claimed in tax returns, depending on a business’s balancing date. The specific details and guidelines will be provided in due course, taking into account the finalization of the legislation.
We will continue to monitor the progress of these measures and provide updates as they develop. In the meantime, small businesses are encouraged to consult with their tax advisors and stay informed about the proposed changes.
Please note that these measures are still subject to the enactment of the law, and businesses should wait for the law to be passed before claiming the boosts.