A new tax law is on the horizon, which sets out to assist small businesses invest in technology. Whilst the tax law is still currently sitting in draft stage in parliament, the ‘Technology Investment Boost’ will aim to assist small businesses adopt new technologies to operate more efficiently and grow.
The boost will provide small businesses, who have an aggregate turnover of less than $50 million, a bonus deduction equal to 20% of their eligible expenditure incurred on expenses and depreciating assets for the purpose of their digital operations.
The expenditure on digital operations may include, but is not limited to, the following:
- Computer and telecommunications hardware and equipment
- Software systems and cloud-based services
- Cyber Security Systems
- Digital media and marketing content that can be created, accessed, stored, or viewed on digital devices, and
- E-commerce platforms supporting digitally ordered or platform enabled online transactions.
There is of course a limit, with the bonus applying to total expenditure of up to $100,000 per income year or specified period, with a maximum bonus deduction of $20,000.
The expenditure must also be necessarily incurred in carrying on a business for the purpose of producing assessable income. If the expenditure is for business and private use, the bonus deductions will only apply to the business proportion.
So, when can you start splurging on, I mean investing in upgrading your business tech? The relevant period for the eligible expenditure is from 7:30pm on 29 March 2022 to 30 June 2023.
But that includes part of the 2022 financial year, I hear you say. Yes, it does, and the draft legislation has indicated the bonus will be calculated separately for the two financial periods with both periods recognised in the 2022/2023 tax year. Don’t worry, you won’t miss out.
It’s important to please note this is still yet to become law! Your accountant will have more details by 30 June 2023.