20% Boost for Small Business Entity

20% Boost for Small Business Entity

Draft legislation has been recently released by the Australian government to provide tax incentives to small business entities to train and teach additional skills to their employees and advance their digital and technological capability.

Small business entities, with an annual turnover of less than $50 million, will have access to this 20% bonus deduction on eligible expenditures.

Skills and Training Boost:

The eligible training should only be for employees of the business. The deduction will not apply to the training of non-employee of business owners, including sole traders, partners in a partnership, and independent contractors.

The following are the criteria for an eligible expenditure:

The expenditure should be delivered by registered providers to employees of the business.
The training is provided either in person (with employees physically located in Australia) or online (where employees are not required to be physically located in Australia)
The training must not be provided by the small business applying for the bonus deduction.
The training must not be on-the-job or in-house training.
The training must not be for training persons who are not employees of the small business.
The 20% bonus deduction will only apply to expenditures incurred between 7:30 pm (AEDT) on 29 March 2022 and 30 June 2024.

Technology Investment Boost:

The proposed technology boost will give eligible small businesses a 20% bonus deduction for eligible expenditures on expenses and depreciating assets that support digital operations. A few examples of this type of expenditure are:

Computer equipment, hardware, and software.
Services that form and enable the use of computer networks.
Digital media and marketing.
e-Commerce platform that enabled online transactions and
Repairs and improvement on depreciable assets.
The 20% bonus deduction will only apply to expenditures incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023 and will be capped at $20,000 per year.

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