The Australian government has launched the ‘Technology Investment Boost’ tax deduction program aimed to incentivize small businesses to embrace the digital revolution.
Small businesses are finally getting some love in the 2022 federal budget. Companies who spend on technology and upskilling their employees will get support from the government in the form of a tax relief. This will help these businesses reduce or recoup the cost of going digital and adopting technologies that can drive their business forward.
If you’re a small business, you will be able to claim 120% of the costs as deductions. Under the federal budget, small businesses with an annual turnover of less than $50 million will be able to claim a $120 tax deduction for every $100 spent on digital technologies. This may cover services such as cybersecurity, cloud computing, phone solutions, digital marketing and web design, or digitalization of business systems such as e-invoicing and portable payment devices.
An annual cap of up to $100,000 will apply to each qualifying income year. This measure has been in effect since March 29, 2022, and will end next year on June 30, 2023.
According to the ATO, for eligible expenditure incurred between 7:30 pm AEDT March 29, 2022 until June 30, 2022, you can claim the expenditure as usual in your 2021-22 tax return, as well as the additional 20% bonus deduction for this period in your 2022-23 tax return.
Meanwhile, for eligible expenditure incurred from July 1, 2022 until June 30, 2023, you can deduct the entire 120% in your 2022-23 tax return.
For more information, you can visit the official documentation from the ATO website here.