The 120% tax deduction for small and medium businesses spend on technology and approved skills/training for staff have now passed parliament and awaiting royal assent – in other words these are pretty much locked in.

So, what does that mean for you and your business?

The Skills and Training Boost is intended to boost approved staff training expenses from 29th March 2022 to 30th June 2024.

As an eligible business you’ll be able to claim an additional 20% in the 2023 tax return for expenses pre-30th June 2022.

Factors to consider:
– External training delivered to employees by a registered training organisation
– The registered training provider must need be the small business or an associate
– Cannot be in house or on the job training
– Non-eligible for non-employee business owners such as sole traders, individual partners in a partnership who do not employ staff
– Expenditure may include incidental costs such as books or necessary equipment

The Technology Investment Boost similarly will apply to approved expenses from 29th to March but will end earlier than above on the 30th of June 2023 and the 20% application again will be included in the 2023 tax return for expenses pre-30th June 2022. The boost is capped at $100k per income year.

Factors to consider:
– Expense must be eligible for deduction (this does not include the salary and wage costs)
– Must be installed and ready for use by 30 June 2023
– Examples of what it can be used for is portable payment devices, cyber security systems or subscriptions to cloud based services

The following expenditure cannot qualify for the technology boost:
• Capital works costs under Division 43.
• Financing costs such as interest expenses.
• Salary or wage costs.
• Training or education costs; and
• Trading stock or the cost of trading stock.
These are going to be important factors for business owners to consider in tax planning conversations and will be a part of our checklist this year to discuss with clients about how we best utilise this scheme. We are believers in the digital adoption to help businesses create efficiencies inhouse, so we are really looking forward to having conversations around this that has a great tax incentive. Alongside, the upskilling of staff will only help businesses receive greater productivity & capabilities in return.

Hot tip for any business owners handling their own bookkeeping, to ensure these expenses are captured correctly and the additional 20% deduction is applied it may be handy in preparation to separate these into a separate category in your accounting software or better yet if you use Xero, start using tracking categories.

For more information, please head to the ATO website or reach out to us!