Small Business Technology Investment Boost: New tax incentives for small and medium-sized businesses.
Written by: Greenhalgh Pickard Accountants
Small businesses can now benefit from an enhanced tax deduction aimed at assisting their digital operations. Under this provision, eligible businesses can enjoy an additional 20% tax deduction to support their digital endeavours and streamline their operations.
What Makes You Eligible?
To be eligible for the small business technology investment boost, your business should qualify as a small business entity, and its aggregated annual turnover must not exceed $50 million for the income year in which you make the expenditure.
Regarding the expenditure, it must fulfil the following conditions:
- The expenditure should already be deductible for your business under the applicable taxation law.
- It must be incurred within the timeframe between 7:30 pm AEDT on 29 March 2022 and 30 June 2023.
- If the expenditure is related to a depreciating asset, the asset must be put into first use or be installed and ready for use for a taxable purpose by 30 June 2023.
What can you claim?
Eligible expenditure includes but is not limited to:
- Digital enabling items – systems, computer and telecommunications hardware and equipment, internet cost, software 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 – digital inventory management, portable payment devices, subscriptions to cloud-based services, goods or services supporting digitally ordered or platform-enabled online transactions, and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth.
- Cyber security – monitoring services, backup management and cyber security systems.
What you can’t claim.
Things that you can’t claim on the boost include salary and wages, financing cost, capital work cost, training and/or education cost and expense that form part of your trading stock.
Cap on the bonus deduction
Under the small business technology investment boost, there are specific caps on the bonus deduction that businesses can claim. Expenditure up to $100,000 is eligible for the bonus deduction, with a maximum annual cap of $20,000. Throughout the entire period, the maximum bonus deduction a business can claim is $40,000.
However, if your 2022–23 income year begins before 1 July 2022, different cap rules apply. As an ‘early balancer,’ you can claim a maximum bonus deduction of $20,000 for the period between 7:30 pm AEDT on 29 March 2022 and the end of your 2022–23 income year. Additionally, you can claim another maximum bonus deduction of $20,000 from the start of your 2023–24 income year until 30 June 2023.
For more information, contact our team of Accountants and get tailored advice for your business.
The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation.
Greenhalgh Pickard’s Accountants