Is your business eligible for a 20% bonus deduction on technology expenses?
The Small Business Technology Investment Boost presents a wide-reaching opportunity to cover various business costs and assets. However, navigating the claim process can raise some questions.
About the boost
The Small Business Technology Investment Boost applies to small businesses with an aggregated annual turnover of less than $50 million. This boost allows for an additional 20% tax deduction to support digital operations and digitisation of business processes.
The boost is applicable to eligible expenses incurred between 7:30 pm AEDT on 29 March 2022 and 30 June 2023. The maximum bonus deduction is capped at $20,000 per income year, with a limit of $100,000 for total expenditure per income year.
Eligibility
To qualify for the Small Business Technology Investment Boost, your business must adhere to the standard aggregated annual turnover rules, which now include a raised $50 million threshold. Your expenditures should meet the following criteria:
- They must already be deductible under taxation law.
- Expenses should have been incurred between 7:30 pm AEDT on 29 March 2022 and 30 June 2023.
- In the case of depreciating assets, they must have been first used or installed for taxable purposes by 30 June 2023.
What can you claim?
A key indicator of eligibility is whether your small business would have incurred the expense had it not been operating digitally. In other words, if the expense is directly related to adopting digital technologies in your business operations, it’s likely eligible. Eligible expenditures encompass:
- Guidance on digitalising your business
- Leasing digital equipment
- Repairs and improvements to eligible assets (excluding capital works)
These eligible expenditures span various business costs, including:
- Digital enabling items such as computer and telecommunications hardware, software, internet costs, and systems that support computer networks.
- Digital media and marketing, including audio and visual content that can be created, accessed, stored, or viewed on digital devices, including web page design.
- E-commerce expenses, covering goods or services facilitating digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services, and advice on digital operations.
- Cybersecurity costs, encompassing cybersecurity systems, backup management, and monitoring services.
The eligibility of specific expenditures hinges on their purpose and their direct connection to digitising your business operations. For example, the cost of a multifunction printer may not be eligible if it’s only used for making paper copies, but it would be claimable if used to convert paper documents for digital use and storage.
Additionally, ongoing subscription costs related to your digital operations can be eligible, such as subscriptions for accounting software platforms or digital content used for web content development and advertising.
Keep comprehensive records and explanations for your claims, especially when expenses serve to digitise your business. If an expense is partly for private use, the bonus deduction applies only to the business-related portion. Special rules apply when claiming the bonus deduction for eligible expenditures on depreciating assets.
Seeking professional assistance
To ensure a seamless application of the Small Business Technology Investment Boost, consider consulting our trusted KMT tax adviser. We’re here to assist you and provide expert guidance.
Contact us today to learn more about how we can support your business and ensure compliance with the latest tax updates from the ATO.
Reference: ATO website
About our adviser: Chrisanthe Lekatis is renowned for her expertise in management accounting, virtual CFO services, and top-tier business advice. Chrisanthe’s passion lies in process improvement, as she combines her analytical prowess with adaptability to explore avenues for business sustainability. By deeply understanding her clients’ businesses and goals, Chrisanthe empowers management with tailored strategies for success, streamlining processes to achieve efficient and cost-effective outcomes. Please do not hesitate to reach out if you need assistance.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.
