Skills & Training Boost
Schedule 4 to the Bill proposes to amend the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A) to allow small businesses with an aggregated turnover of less than $50 million to deduct a bonus deduction equal to 20% of eligible expenditure for external training provided to their employees. This measure was announced as part of the Federal Budget 2022–23 by the previous Government on 29 March 2022.
Key points about eligible expenditure and eligible employees:
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The expenditure must be for training employees, either in-person in Australia, or online (there is no requirement for the employees to be in Australia if the training is provided online).
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The expenditure must be charged, directly or indirectly, by a registered training provider and be for training within the scope of the provider’s registration (unless the provider is a registered higher education provider within the meaning of the Tertiary Education Quality and Standards Agency Act 2011 in which case there is no scope of registration requirement).
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The registered training provider must not be the small business or an associate of the small business.
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The expenditure must already be deductible under the taxation law.
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Expenditure for training persons other than employees is not eligible for the bonus deduction. For example, the bonus deduction is not available for the training of non-employee business owners such as sole traders, partners in a partnership and independent contractors (who are not ‘employees’ of the business within the ordinary meaning).
Normal or late balancers will claim the bonus deduction in their 2023 tax return in respect of expenditure incurred between 7:30pm AEDT on 29 March 2022 and the end of their 2021–22 income year, as well as expenditure incurred in the 2022–23 income year. The bonus deduction for expenditure incurred in the 2023–24 income year will be claimed in the 2024 tax return. Special rules will apply to taxpayers who are early balancers.
This measure is proposed to apply from 7:30pm AEDT on 29 March 2022 until 30 June 2024.
Technology investment boost
Schedule 5 to the Bill proposes to amend the IT(TP)A to allow small businesses with an aggregated annual turnover of less than $50 million, to access a bonus deduction equal to 20% of eligible expenditure. This measure was announced as part of the Federal Budget 2022–23 by the previous Government on 29 March 2022. Eligible expenditure includes costs incurred on business expenses and depreciating assets that support their digital operations or digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud based services. An annual $100,000 cap on expenditure will apply to each qualifying income year or specified time period, up to a maximum bonus deduction of $20,000 per income year or specified time period.
The boost is proposed to apply to eligible expenditure incurred from the budget announcement until 30 June 2023. Normal or late balancers will claim the bonus deduction in their 2023 tax return in respect of expenditure incurred between 7:30pm AEDT on 29 March 2022 and the end of their 2021–22 income year, as well as expenditure incurred in the 2022–23 income year. Special rules will apply to taxpayers who are early balancers.
This measure is proposed to apply from 7:30pm AEDT on 29 March 2022 until 30 June 2023.