How to get a 20% technology investment boost
In today’s digital age, technology plays a crucial role in the success of small businesses. To support the digitization efforts of small businesses, a 20% bonus deduction on technology expenditure has been introduced. This boost aims to help small businesses enhance their digital operations and streamline their processes.
Here we will explore the key points of this initiative and guide you on how to claim the bonus deduction.
About the Boost: The small business technology investment boost is available to businesses with an aggregated annual turnover of less than $50 million. It allows for an additional 20% tax deduction on eligible technology expenditures. The boost is aimed at supporting businesses in their digital transformation journey and encouraging the adoption of modern technologies.
Eligibility: To access the small business technology investment boost, your business must be classified as a small business entity with an aggregated annual turnover of less than $50 million. The expenditure must be incurred between 7:30 pm AEDT on March 29, 2022, and June 30, 2023. It is important to note that the expenditure must already be deductible under taxation law and should be for a taxable purpose.
What You Can Claim: Eligible expenditure for the bonus deduction includes various technology-related items. These may include computer and telecommunications hardware, software, internet costs, digital media and marketing expenses, e-commerce support, cyber security systems, and more. The bonus deduction can be applied to the business-related portion of these expenses. If your business is registered for GST, the bonus deduction is calculated on the GST-exclusive amount plus any GST that cannot be claimed as a credit.
Cap on the Bonus Deduction: There is an annual cap on the bonus deduction to ensure fairness and control the overall expenditure. Small businesses can claim up to $100,000 of eligible expenditure per income year, with a maximum bonus deduction of $20,000 per year. This means that the total bonus deduction a business can claim during the specified period is $40,000.
Depreciating Assets: The bonus deduction also applies to expenditure on depreciating assets. To be eligible, the asset must be first used or installed and ready for use for a taxable purpose between March 29, 2022, and June 30, 2023. However, this rule does not apply to expenses incurred in the development of in-house software allocated to a software development pool. Repair and improvement costs for depreciating assets are also eligible for the bonus deduction if they are incurred during the specified time period.
Claiming the Bonus Deduction: To claim the bonus deduction, you will need to include the eligible expenditure in your tax return for the relevant income year. The timing of claiming the deduction depends on your income year and whether you are an early, normal, or late balancer. Normal balancers can claim the bonus deduction in their 2022–23 tax return for eligible expenditure incurred between March 29, 2022, and June 30, 2023. Late and early balancers have specific rules that determine when to claim the deduction. It is essential to understand your business’s income year and consult with a tax professional to ensure accurate claiming of the bonus deduction.
The small business technology investment boost presents an excellent opportunity for small businesses to invest in technology and drive their digital transformation. By claiming the 20% bonus deduction on eligible technology expenditure, businesses can enhance their operations, improve efficiency, and stay competitive in today’s digital landscape. Remember to check your eligibility, understand the claimable expenses, and adhere to the specific claiming rules based on your income year. Embrace the power of technology and leverage this boost to take your business to new heights of success.
Disclaimer: This article provides general information and should not be considered as tax advice. We recommend consulting with a qualified tax professional to understand the specific details and implications of the small business technology investment boost for your business.
