News
As part of the Federal Budget announcement, the Government is set to introduce a skills and training boost to support small and medium-sized businesses to train and up-skill their employees. The idea is to help with investing in our employees to increase their essential skills and the boost will apply to eligible expenditure incurred from on 29 March 2022 until 30 June 2024.
Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.So basically, for every $100 spent on skills and training you will be able to deduct $120!
The external training courses will need to be provided to employees in Australia or online and delivered by entities registered inAustralia. While the federal government is yet to provide a full rundown of eligible providers, I suspect such training will need to be provided by RTO’s(Registered Training Organisations) who are registered with Australian SkillsQuality Authority and also education providers listed with The TertiaryEducation Quality and Standards Agency.
We assume there will need to be a nexus between the employee’s employment and the training program undertaken for the boost to apply but we will wait for further details to be released by the government.
Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.So therefore, where does this leave you if you are a sole trader who undertakes external skills training? Based on the papers issued, sole traders will not be able to claim the additional 20% deduction.
There is also no spending cap under this boost.
For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year – you won’t be able to claim it in the current year for intended expenditure between now and30 June 2002, but rather deferred till 30 June 2023. So, keep that in mind before you start registering your team for training sessions. For eligible expenditure incurred between 1 July 2022 and 30 June 2024, the boost will be claimed in the income year in which the expenditure is incurred, as you would expect.
In my view, the skills and training boost should be extended to sole traders and the range of training providers be expanded, but we will see how it rolls out officially. This incentive could prove vital to keeping Australia up-skilled and generate a skilled workforce for Australia’s small business industry, which has been impacted by COVID. Its giving back to small business for the role they play in driving our economy
It's important to note that legislation is still required to be passed, meaning that these deductions are not a “sure thing”. But let’s watch this space.
Cedomir Jesic
– Founder & Director, Attune Advisory
