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Everything you need to know about the ‘small business skills and training boost’

The Australian Taxation Office (ATO) has announced that small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction for external training courses delivered to employees by registered training providers.

The boost applies to eligible expenditure incurred for 7:30pm AEDT on 29 March 2022 until 30 June 2024.


To access the small business skills and training boost, your business needs to be a small business entity. Your aggregated turnover must be less than $50 million for the income year in which you incur the expenditure.

The expenditure must be:

  • for the provision of training to employees of your business, either in-person in Australia, or online
  • charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours
  • already deductible for your business under taxation law
  • incurred within a specified period (between 7:30pm AEDT or by legal time in the ACT on 29 March 2022 and 30 June 2024)

Where the training is a component of a larger program or course of training, the enrolment or arrangement relating to the relevant expenditure must be made or entered into at or after 7:30 pm (by legal time in the ACT) on 29 March 2022.

What you can claim

The bonus deduction is a tax incentive to support businesses in investing in the training of their employees. By claiming this deduction, businesses can deduct certain expenses related to employee training. To be eligible, the training must be relevant to their current or future roles within the company. It’s important to choose registered providers for eligible training programs. Visit for a list of registered providers.

Training expenses cover the cost of courses as well as related incidental costs such as books or equipment needed. It’s important to keep track of receipts for reimbursement or tax purposes.

If your business is registered for GST and the training is not GST-free, the bonus deduction is calculated on the GST exclusive amount plus any GST you cannot claim as a GST credit.

The bonus deduction allows taxpayers to claim a 20% deduction upfront in the first year for eligible capital expenses, providing immediate tax relief and potentially boosting cash flow. It’s a valuable opportunity for businesses to recover costs quickly.

There may be fringe benefits tax (FBT) consequences associated with the expenditure you incur. For more details, refer to Fringe benefits tax – a guide for employers.

What you can’t claim

You can’t claim expenditure for:

  • training of non-employee business owners such as sole traders, partners in a partnership or independent contractors
  • costs added on an invoice by an intermediary on top of the cost of training, such as commissions or fees, as they are not charged directly or indirectly by the registered training provider.

Research and development tax incentive

Under the research and development (R&D) tax incentive program, businesses can claim a notional R&D deduction for eligible R&D expenses. This deduction is specific to the R&D tax incentive program and cannot be claimed in addition to deductions under other tax provisions. However, businesses may also be eligible for a bonus deduction, known as the R&D tax offset, based on what the deduction under other taxation law would have been. This program aims to support innovation and reduce tax liability for businesses engaged in R&D activities.

You can claim both the bonus deduction and the R&D notional deduction. The bonus deduction will not affect the amount of the R&D notional deduction. The R&D notional deduction amount is the actual expenditure amount, not the expenditure amount and the bonus deduction amount.

Not-for-profit organisations

A taxable not-for profit organisation can claim the boost in their company tax return if they meet the following requirements:

  • eligibility (small business with an aggregated annual turnover of less than $50 million), and
  • eligible expenditure.

A taxable not-for-profit is not exempt from income tax. You are required to lodge a tax return each year or notify a return not necessary.

When you can claim

You generally claim a deduction in the year the expenses are incurred. Under the delayed claim rule, you may have to claim a deduction for the eligible expense in your tax return for the income year in which you incurred it and claim the 20% bonus amount in a later year’s tax return. This generally depends on:

  • when your income year runs, so whether your business is an early, normal or late balancer
  • at what time during you income year you incur expenses.

For more information please see 2023 Individual tax return instructions – Business and professional items

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