It’s a great headline isn’t it? Spend $100 and get a $120 tax deduction. Days after the Federal Budget announcement that businesses
will be able to claim a 120% deduction for expenditure on training and technology costs, we started receiving marketing emails encouraging
us to spend now to access the deduction.
But, there are a few problems. Firstly, the announcement is just that, it is not yet law. And, given the Government is in caretaker mode
for the Federal election, we do not know the position of the incoming Government on this measure. And, even if the incoming Government is
supportive, we are yet to see draft legislation or detail to determine the practical application of the measure. What was announced? The
2022-23 Federal Budget announced two ‘Investment Boosts’ available to small businesses with an aggregated annual turnover of less than $50
The Skills and Training Boost is intended to apply to expenditure from Budget night, 29 March 2022 until 30 June 2024. The business,
however, will not be able to claim the deduction until the 2023 tax return. That is, for expenditure between 29 March 2022 and 30 June 2022,
the boost, the additional 20%, will not be claimable until the 2022-23 tax return, assuming the announced start dates are maintained if and
when the legislation passes Parliament.
The Technology Investment Boost is intended to apply to expenditure from Budget night, 29 March 2022 until 30 June 2023. As with the
Skills and Training Boost, the additional 20% deduction for eligible expenditure incurred by 30 June 2022 will be claimed in the 2023 tax
The boost for eligible expenditure incurred on or after 1 July 2022 will be included in the income year in which the expenditure is
Technology Investment Boost
A 120% tax deduction for expenditure incurred by small businesses on business expenses and depreciating assets that support their digital
adoption, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services, capped at $100,000 per annum.
We have received a lot of questions about the specific expenditure the boost might apply to, for example does it cover website
development or SEO services? But until we see the legislation, nothing is certain.
Skills and Training Boost
A 120% tax deduction for expenditure incurred by small businesses on external training courses provided to employees. External training
courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.
Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other
We are waiting on further details of this initiative to be released to confirm whether there will need to be a nexus between the
training program and the current employment activities of the employees undertaking the course. So once again, until we have something more
than the announcement, we cannot confirm how the measure will apply in practice or how broad (or otherwise) the definition of skills
What happens if I have already spent money on training and technology in anticipation of the bolstered deduction?
If the measure becomes law, and the start date of the measure remains the same, we expect that any qualifying expenditure incurred in the
2021-22 financial year will be claimed in your tax return. But, the ‘boost’, the extra 20% will not be claimable until the 2022-23 financial
If the measure does not come to fruition, you should be able to claim a deduction under normal rules for the actual business expense.