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New Small Business Tax Incentives

Although not yet enacted into law, there are now two new tax incentives operating for small businesses. These are the skills and training boost and the technology investment boost. Both incentives apply to businesses that have an annual turnover of less than $50m.

Skills and training boost

This enables a business to claim a 120% deduction for expenditure incurred on training employees. To be eligible, the training expenditure must already be 100% deductible. The employees must be in Australia if the training is delivered in person. If the training is delivered online, the participant can be overseas.

Note however, that the expenditure is only for employees. Training expenditure for sole proprietors, individual partners in a partnership or contractors is not eligible.

Also, the training provider must be registered with an approved government training body. Further there are some other exclusions – for example, the training cannot be in-house or on-the-job training.

There is no expenditure cap on the training boost incentive. Under the proposed law, the incentive applies to expenditure incurred in the period 29 March 2022 to 30 June 2024. For expenditure incurred in the year ended 30 June 2022, the extra 20% deduction will be claimed in the tax return for the year ending 30 June 2023.

Technology investment boost

This incentive also gives an additional 20% deduction for eligible expenditure. It can also apply to expenditure incurred on purchasing assets, such as a laptop computer.

The proposed law states that the incentive applies to expenditure incurred wholly or substantially for the purposes of your digital operations or digitising your operations. These terms are not defined. It would seem that any expenditure that relates to computers, telecommunications and other forms of digitisation would be eligible.

In addition to digital operations and digitising operations, digital media and marketing and expenditure on e-commerce are specifically included.

There are two important differences between this incentive and the skills and training boost. The first is that there is an annual cap on expenditure of $100,000. This means that the maximum extra deduction that can be claimed is $20,000 per year. The second important difference is that this incentive finishes on 30 June 2023 and not 30 June 2024.

As for the skills and training boost, the extra 20% deduction relating to expenditure incurred in the year ended 30 June 2022 is claimed in the tax return for the year ending 30 June 2023.



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