November 2022

As small businesses continue operating under the pressure of rising costs, inflation and ongoing supply chain constraints, the Government is prioritising tax breaks to help ease financial stress.

The most recent Federal Budget allocated $15 million for a debt help and counselling hotline for the small business sector as well as energy-efficiency grants for SMEs.

And there are more tax breaks coming.

New tax incentives announced for small business

In August, the Albanese Government released draft legislation for public consultation to introduce tax incentives worth approximately $1.6 billion to support small businesses to:

• Train and upskill staff
• Invest in digital and tech capacity.

A version of this legislation is expected to be tabled in Federal Parliament this year.

What is the skills boost?

The Skills and Training Boost will give businesses a bonus 20% deduction for eligible expenditure on external training for your employees. The training can be in person or online (with conditions) and covers books and equipment. The maximum amount businesses can claim in any year under this incoming tax break is $100,000.

To qualify for the tax break, external training sessions must be held by registered providers. That means one of these four government authorities has registered that provider to operate in Australia:

• Australian Skills Quality Authority (ASQA)
• Tertiary Education Quality and Standards Agency (TESQA)
• Victorian Registration and Qualifications Authority
• Training Accreditation Council of Western Australia.

It won’t apply to:

• Training that does not come within the scope of the registered provider’s registration
• Training people who aren’t your staff, such as sole traders, individual partners and independent contractors; however, this may be reviewed before the law passes
• A business running its own training, such as in-house or on-the-job training
• Where entities not delivering the training, such as an intermediary, charge fees.

You can find out more about the Skills and Training Boost from The Treasury.

What is the technology boost?

When in force, the Technology Investment Boost will let small businesses deduct an extra 20% for business expenses and depreciating assets. Those claims must relate to supporting digital adoption, including:

• E-commerce, such as for portable payment devices, digitally ordered or platform-enabled online transactions
• Cyber security systems
• Subscriptions to cloud-based services
• Digital marketing and media, including audio and visual content, if it’s created, accessed, viewed or stored on digital devices
• Computer and telecommunications hardware, equipment, software, services, and systems that build and run your computer networks
• Improvement and repair costs for depreciating assets.

Businesses will be able to claim up to $100,000 in expenses and depreciation under the technology boost. Here’s where to learn more about the Technology Investment Boost.

Who is eligible, and how do you claim?

Small businesses with a turnover of less than $50 million can qualify for the tax breaks.

Once the law takes effect, businesses:

• Will be able to backdate claims to 29 March 2022 for either tax break
• Will need to claim before 30 June 2023 for the technologies boost
• Can claim until 30 June 2024 for the skills boost.

Where to next?

If these tax breaks suit your unique business circumstances, you can remain updated through the ATO’s small business newsroom and this Parliamentary page.