Under the technology boost, small businesses may be able to access a bonus 20% tax deduction on eligible technology expenses and depreciating assets which are used to digitise their operations.
Dates: for expeneses incurred between 7:30 pm AEDT 29 March 2022 to 30 June 2023
(note there from 29 March 2022 – 30 June 2022 would normally fall into the 2022 tax return however the bonus for that income year should be claimed in 2023 tax return)
Limits: Bonus deduction is limited to $20,000 per year (ie on expenses up to $100,000 pa). That is;
- 7:30 pm AEDT 29 March 2022 to 30 June 2022 – $20,000
- 1 July 2022 to 30 June 2023 – $20,000
Eligibility:
- Aggregated turnover < $50m
- The expenditure must already be deductible for your business under taxation law
What Expenses are included:
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 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.
If a business purchases a depreciating asset in the relevant period, the expenditure will be the cost of the asset.
What you can’t claim
- 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.
Resources:
Examples of expenses which could be eligible for the Technology Boost 20% bonus tax deduction:
- Advisory Costs – Advice about digitalising a business
- Cyber security including INSURANCE premiums
- Digital assets such as laptops, servers, online data drive, back-up system (Included unless they are disposed of, and that disposal is not involuntary, before 30 June 2023)
- Leases of digital equipment
- Portal payment devices (eq square device)
- Payment gateways – electronic (eg Merchant Fees for electronic payments)
- Printers/scanners – This depends upon how the printers/scanners are used. If they are used to convert paper documents into digital documents that are then stored/used by the business, then they may be able to be included in the 120% digitalisation boost. If they are used to generate paper documents, then they will not be included in the 120% digitalisation boost.
- Security cameras – Depends on the context. Installation of cameras to monitor stock troughs remotely would qualify. Security cameras to record movement of customers is unlikely to qualify unless it is linked to a digital initiative (e.g. self-service in a supermarket).
- Subscriptions software
- Subscriptions marketing – Subscriptions for digital marketing software and access to digital marketing such as Instagram are included in the 120% digitalisation boost
- Telephones – Telephones – Smartphones – Yes. Smart mobile phones are needed for multifactor authorisation which is an integral part of the digital environment. Handsets not included
- Items that are NOT included
- Interest/financing costs of acquiring digital assets – These costs are specifically excluded from the 120% digitalisation boost – section 328-460
- In house software development costs – likely to be salary and wages which are specifically excluded from the 120% digitalisation boost.
- Recruitment costs for digital staff
- Training costs in relation to digital technology
If you would like to discuss if your small business is eligible to claim the Technology Boost 20% bonus tax deduction, please contact us.
