Digital Tax Incentives Explained

30 July 2022
By Sam Davies

If you aren’t aware…the world is going digital. And Australia is behind the rest of the world. Two new Digital Tax Incentives are looking to change that. But what exactly are they? Who can claim? How does it actually work?  

Let’s dive into it.  

 

What is on offer?

Tech work (new or upgrades) and digital skills training came out as key points of the 2022-2023 federal budget Two new tax deductions have been proposed by the Morrison Government. The “Small Business Technology Investment Boost”, and the “Small Business Skills and Training Boost”. 

Each will offer participating businesses an extra 20% tax deduction on relevant expenditure. Basically, the incentives are designed to encourage small businesses to invest in the digital side of their business!  

 

Who is this for?

If you are a small business with an aggregated annual turnover of less than $50 million then you are eligible for these deductions.  

Under the Small Business Technology Investment Boost, relevant tech spending will be capped at $100,000 annually. Business will be free to claim expenses past that point as per usual. 

No spending cap is listed under the Small Business Skills and Training Boost. 

 

What type of digital products can I use this for?

The ATO gives a some info on what businesses can claim under the Technology Investment Boost. There are a lot of options – this can be spent across Websites, Cybersecurity, Martech, Ecomm, Software, Cloud Solutions, Apps and more.  

Some budget docs suggest SMEs could claim the cost of new laptops and next-gen websites, encouraging small businesses to bolster their technological capacities. 

For the skills and training package, eligible external training courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia. The government haven’t provided more details on eligible providers yet, but most likely they will include companies registered with a Skills Quality authority, and education providers listed by the Tertiary Education Quality and Standards Agency. 

What is not included?

On the training side, the main point to note is that training applies to external courses for employees. This means in-house training won’t be able to be claimed.  

It also suggests that sole traders, who upgrade their own digital skills, won’t be eligible for the deduction. 

 

When does this all kick off?

Both policies are now live! The policies have different end-dates – the tech package is available until EOFY 2023, while the training package will most likely stay until the following year – EOFY 2024. 

To claim the bonus on purchases made between last Tuesday night and the end of the 2021-2022 financial year, small businesses must first submit a normal expenditure claim. The bonus 20% will only be applied in the 2022-2023 financial year, the ATO stated (which is most likely due to the election, which will be a factor in these two policies being confirmed).  

Expenditure (that is eligible) made in the 2022-2023 financial year is different. Small businesses will be free to “deduct the entire 120% in your 2022–23 tax return,”.  

 

What else do I need to know?

Crucially, the ATO has said “These measures are not yet law,” – legislation is required for both packages to go ahead and at this stage, the bonus deductions are not 100% confirmed. The impending election will play a large part! 

 

I want to take advantage of this, what should I do?

Contact kwpx of course! We provide a huge range of digital solutions and can discuss what solutions and upgrades are right for your business. Whether its changes to an existing website, a brand-new site, a UX review, an App for your customers or staff, security issues you want to discuss – whatever it is, get in touch and we can help you take advantage of these incentives.

 

Get in touch if you’ve got any questions, I’d be happy to have a chat.

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Kwpx Kaurna yartangka yuwanthi. Kwpx stands on Kaurna land. We work across Kaurna land and Larrakia land in the Northern Territory. We take pride in everything we do and see reconciliation as important work for all Australians.

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Adelaide
Level 1, 251 Rundle Street
Adelaide SA 5000
08 8217 9100
Darwin
The Village Workplace
Level 1, 38 Parap Road
Parap NT 0820
08 8941 1799
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