Small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction to support their digital operations and digitalise their operations.
The boost applies to eligible expenditure incurred between 7:30pm AEDT on 29 March 2022 and 30 June 2023. The boost is for expenses and depreciating assets and is capped at $100,000 of expenditure per income year. You can receive a maximum bonus deduction of $20,000 per income year.
Eligibility
To access the small business technology investment boost, your business needs to be a small business entity. Your aggregated annual turnover must be less than $50 million for the income year in which you incur the expenditure.
The expenditure must:
- already be deductible for your business under taxation law
- be incurred between 7:30pm AEDT 29 March 2022 and 30 June 2023.
If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use for a taxable purpose by 30 June 2023.
What you can claim
Eligible expenditure may include, but is not limited to, business expenditure on:
- digital enabling items – computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks
- digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design
- e-commerce – goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth
- cyber security – cyber security systems, backup management and monitoring services.
Where the expense is partly for private purposes, the bonus deduction can only be applied to the business-related portion
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.
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 the following expenses towards the boost:
- salary and wages
- capital works costs
- financing costs
- training or education costs (these may be eligible for the Small business skills and training boost)
- expenses that form part of your trading stock costs.
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 both of the following requirements:
- eligibility (small business with an aggregated annual turnover of less than $50 million)
- 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 your income year you incur the expense.