On 29 August 2022 the Government released draft legislation about a proposed 20% bonus deduction for small businesses with an aggregated turnover of less than $50 million, that incur expenditure to:
train and upskill their employees through external providers registered in Australia in the period between 29 March 2022 and 30 June 2024 (Skills and Training Boost); and
improve their digital and tech capacity in the period between 29 March 2022 and 30 June 2023 (Technology Investment Boost).
It is noted that the proposal is not yet law and this information piece only outlines some interesting aspects of this proposal that may or may not become law in its current form.
How does this affect you?
If you are a small business with an aggregated turnover of less than $50 million that can claim a deduction for business expenses under the current rules, you may be able to claim this 20% bonus deduction.
The bonus deduction is limited to an amount of $20,000 per income tax year (or limited to expenditure of a maximum $100,000 GST exclusive) and the bonus deduction for expenditure incurred in the 2022 income tax year (i.e. incurred in the period between 29 March 2022 and 30 June 2022) will only be claimable when the 2023 income tax return is lodged. The time lag for claiming a 2022 bonus deduction is purely based on administrative reasons – ordinarily the bonus deduction can be claimed in the year the expense was incurred.
Note, there are different timing rules (not discussed here) for late balancers (i.e. entities with income years starting after 1 July) and early balancers (i.e. entities with income years starting before 1 July).
Stay tuned to see if this deduction comes to fruition and speak with us about how to maximise the benefit for your small business!