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Another part of the March 29 Federal Budget announcement is that the Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses. The boost will apply to eligible expenditure incurred from 7:30pm 29 March 2022 until 30 June 2023.
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 business expenses and depreciating assets that support their digital adoption. This will include this such as portable payment devices, cyber security systems or subscriptions to cloud-based services, website designs, online sales platforms.
So exactly like the skills and training boost, for every $100spent on eligible technology you will be able to deduct $120.
There is however an annual cap that will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.
Here's an example to help illustrate the technology investment boost in action:
Henry owns a plastic manufacturing company, Plastic For You Pty Ltd, that has annual turnover of $3 million and 12 employees.
In April2022, as part of an overseas expansion, Plastic For You invests $100,000 to develop an online presence and build a digital inventory tracking system.
In July2022, Plastic For You purchases multiple software subscriptions to enhance customer data analytics and marketing. Plastic For You incurs total expenditure of $100,000.
The Government’s new Technology Investment Boost means thatPlastic For You can deduct an extra $40,000, reducing their tax bill by$10,000. The company can use the extra money to reinvest and grow.
For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. So, keep that in mind, as you won’t see the benefit till 2023. While, for eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred.
This presents an excellent time to invest in your business’ digital growth and make the most of all that investing in digital can do! Build that website, buy that software, and provide your clients and customers with seamless online experiences. We at Attune Advisory have been and will continue to explore our digital technology footprint.It will also allow our small businesses in Australia to modernise their approach and presence with the rest of the world. However, I would have like to have seen this boost be available for more the just 30 June 2023. As we know, it can take time to get things moving. So, start today I say.
Once again, 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 eagerly.
Cedomir Jesic
– Founder & Director, Attune Advisory
