That’s a nice thought, isn’t it? Spend $ 100 and get a $ 120 tax deduction. Days after the federal budget announced that companies could demand a 120% tax deduction for training costs and technology costs, we began receiving marketing emails urging us to spend immediately to gain access to the tax deduction.
However, there are some problems. First, the announcement is not yet law. And we do not know the new government’s position at this stage. And we still need to see the bill for the details to know about the practical application of the measures.
What is announced:
Federal Budget 2022-23 announces two “Investment Boosts” available to small businesses with less than $ 50 million in annual revenue.
- The Skills and Training Boost should be available from March 29, 2022, to June 30, 2024. A 120% tax deduction for small businesses that spend on external training for employees. External training courses must be provided in Australia or online by entities registered in Australia.
However, the company cannot apply the additional deduction until tax return 2023. This means that for expenses between March 29, 2022, and June 30, 2022, an increase of another 20% will not be possible until tax return 2022-23.
- The Technology Investment Boost relates to expenditure from March 29, 2022, to June 30, 2023. A 120% tax deduction for small businesses for expenditure on digital assets that support their digital adoption, such as portable payment devices, cyber security systems or cloud subscriptions. The claim is limited to $ 100,000 per year. As with the Skills and Training Boost, an additional 20% deduction for the corresponding expenditure will be deductible in the 2022/23 tax year.
The eligible expenditure after July 1 2022, will be claimed in the year incurred.
We look forward to providing more details about this initiative to clarify any need for a link between the training program and the current work activities of the staff taking the course. This point is not at all clear as yet.
What happens if I have already spent on training and technology in anticipation of the extra deduction?
If the measure becomes law as announced, we expect all eligible expenses incurred in the fiscal year 2021-22 to be included in your tax return for that year. However, the “increase”, i.e. a surplus of 20%, cannot be claimed until the fiscal year 2022-23.
