Small Business Technology Investment Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for eligible technology expenditure.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will be able to claim an additional 20% deduction for expenses incurred to support their digital operations.

The boost is available for expenditure incurred between 29 March 2022 and 30 June 2023 and is capped at $100,000 per income year.  The maximum bonus deduction is $20,000 per income year.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

1. You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
2. The expenditure is “eligible expenditure” (see below);
3. The expenditure is deductible for your business under Australian tax law;
4. The expenditure has been incurred between 29 March 2022 and 30 June 2023.

Eligible expenditure

Eligible expenditure may include (but is not limited to):

• digital enabling items;
• digital media and marketing;
• e-commerce;
• cyber security.

At the end of this article we have included a table of example expenditure that may be eligible for the boost.

What cannot be claimed?

You cannot claim the following expenses towards the boost:

• Salary and wages
• Capital works costs
• Financing costs
• Training or education costs (but these may be eligible for the Small Business Skills and Training Boost)
• Expenses that form part of your trading stock.

Cap on the deduction

There is an annual cap of $100,000 on eligible expenditure (with the bonus deduction capped at $20,000).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your technology expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been incurred to help digitise your business;

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software;

4. Provide us (your accountant) with the details of all relevant costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.