The Australian government has reinvigorated the 120% skills
training and technology costs deduction for small and medium business.
An election ago, the 2022-23 Budget proposed a 120% tax
deduction for expenditure by small and medium businesses on technology, or skills and training for their staff. This proposal has now been
adopted by the current Government and details released in recent exposure draft by Treasury.
Timing
Two investment ‘boosts’ will be available to small and medium businesses with an aggregated annual turnover
of less than $50 million:
The Skills and Training Boost is intended to apply to expenditure from 7.30pm ACT time on Budget night, 29 March 2022 until 30
June 2024. The business, however, will not be able to start claiming the bonus deduction until the 2023 tax return. That is, for
expenditure incurred between 29 March 2022 and 30 June 2022, the additional 20% ‘boost’ deduction will not be claimable until the 2022-23
tax return (assuming the announced start dates are maintained if and when the legislation passes Parliament).
The Technology Investment Boost is intended to apply to expenditure from 7.30pm ACT time on Budget night, 29 March 2022 until 30
June 2023. As with the Skills and Training Boost, the additional 20% deduction for eligible expenditure incurred by 30 June 2022 will be
claimed in the 2023 tax return.
The boost for eligible expenditure incurred on or after 1 July 2022 will be included in the income year in which the expenditure is
incurred.
When it comes to expenditure on depreciating assets, the bonus deduction is equal to 20% of the cost of the
asset that is used for a taxable purpose. This means that, regardless of the method of deduction that the entity takes (i.e., whether
immediate or over time), the bonus deduction in respect of a depreciating asset is calculated based on the asset’s cost.
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We’ve summarised the key details in this update.
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