The Former Government announced it would introduce measures to provide certain business taxpayers with bonus tax deductions for expenditure relating to training employees or improving digital operations. It’s been unclear if the new Government would carry on with this initiative but on 29 August 2022 the Government announced that it will proceed with these measures and Treasury has released exposure draft legislation for public comment.

The Skills and Training Boost allows small businesses (aggregated turnover less than $50 million) to claim a 120% deduction for eligible expenditure incurred on external training for employees between 29 March 2022 and 30 June 2024. The key requirements to qualify are that the expenditure must be:

• Deductible under any provision of the tax law (e.g., the general deduction provisions in section 8-1 or the black hole provisions etc);

• For training employees, either in-person in Australia or online; and

• Charged, directly or indirectly, by a registered training provider and be for training within the scope (if any) of the provider’s registration.

There are some specific exclusions, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees. The training boost is not available to sole traders, partners in a partnership, independent contractors (who are not employees), or associates of the business such as relatives or related entities.

The bonus deduction can only be claimed in the 2023 and 2024 tax returns. If a taxpayer incurred qualifying expenditure before 30 June 2022 the bonus deduction relating to these expenses would be claimed in the 2023 tax return.

The Technology Investment Boost provides a 120% deduction for eligible expenses that are incurred for the purposes of improving digital operations or digitising business operations. This can include the cost of depreciating assets. The boost is aimed at costs incurred between 29 March 2022 and 30 June 2023 and is limited to a maximum bonus deduction of $20,000 (i.e., $100,000 of expenses). Broadly, the eligible expenditure for this measure can include expenditure on:

• Digital enabling items – computer and telecommunications hardware and equipment, software, systems and services that form and facilitate the use of computer networks;

• Digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices; and

• E-commerce – supporting digitally ordered or platform enabled online transactions.

For depreciating assets acquired, the bonus deduction can only be claimed where the business continues to hold the asset beyond 30 June 2023 (unless there is an involuntary disposal). The bonus deduction is claimed on the cost of depreciating assets regardless of the method used to claim deductions (e.g., whether an immediate deduction is available or deductions are claimed over a period of time under Division 40). Repair and improvement costs can also potentially qualify for the bonus deduction.

The following expenditure cannot qualify for the technology boost:

• Capital works costs under Division 43;

• Financing costs such as interest expenses;

• Salary or wage costs;

• Training or education costs; and

• Trading stock or the cost of trading stock.

These are not laws just yet but stay tuned to see what happens!