About the boost

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 digitise their operations.

The boost applies to eligible expenditure incurred between 7:30 pm AEDT on 29 March 2022 and 30 June 2024. The boost is for business 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 meet the standard aggregated annual turnover rules (with an increased $50 million threshold).

The expenditure must:

• already be deductible for your business under taxation law
• be incurred between 7:30 pm AEDT 29 March 2022 and 30 June 2024.

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 of the relevant financial year.

Find out if you are eligible for the Small business skills and training boost.

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 expenditure is not GST-free, the bonus deduction is calculated on the GST-exclusive amount plus any GST you cannot claim as a GST credit incurred in carrying on your business.

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.

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.

If you’d like to discuss how this bonus deduction on technology expenditure might be applicable to your small business, please contact the team at Business Wise today!

Business Wise

The team at Business Wise don't just do bookkeeping and accounting - we believe that successful businesses are those that are informed, proactive and open to change, and we want to help you on your journey to success.