Additional Tax Deductions for Small Businesses through Technology Investment Boost

About the ‘boost’

The Technology Investment Boost for small businesses is now a law. Here’s how to maximise your tax deductions and benefit from it.

Over a year after the 2022–23 Federal Budget release, the tax deduction for spending on technology, or skills and training for workers of small businesses, is finally a law.

There are some difficulties with the timeframe, though. In order to qualify for the Technology Investment Boost program, you had to have purchased the technology and installed it in qualified assets before June 30, 2023, which is just seven days after the legislation passed Parliament.

Who can access the boost?

Small business entities (individual sole traders, partnerships, companies, or trading trusts) with a yearly aggregated turnover of less than $50 million are eligible for the skills, training, and technology boosts. The turnover of your company, as well as that of your affiliates and associated businesses, is known as aggregated turnover.

What do you get from the boost?

From 7:30 pm (AEST) on March 29, 2022, to 30 June 2023, the Technology Investment Boost offers SMEs an additional or bonus deduction for costs and depreciating assets for digital operations or digitising.

If you are legally obligated to pay for an expense under a contract or a tax invoice, you are said to have “incurred” the debt.

There is an extra step for depreciating assets, such as computer hardware. The technology must be ready for usage after being installed and purchased.

Tax Deductions for Small Businesses to Digitise Operations

The following categories of expenses may be covered by the technology boost:

• Digital enabling items such as computer systems and services that help create and use computer networks, as well as telecommunications hardware and software and internet expenses

Digital Category	Examples of Eligible Expenditure for Technology Investment Boost
Digital enabling items	Computer hardware and equipment Desktop and laptop computers Digital tablets Computer keyboards Webcams Computer mouse, trackpads and stylus Computer cables Powerpacks Electrical cords and power adapters Repair and improvement costs to computer hardware and equipment
	Telecommunications hardware and equipment Landline phones Mobile phones Smart watches Telephone accessories Repair and improvement costs
	Software Initial purchase Annual or monthly subscriptions
	Internet costs Usage costs Connection costs Repair costs
	Systems and services that form and facilitate the use of computer networks Subscriptions to support digital capabilities Help desk support fees and charges IT support charges Repair and improvement costs

© National Tax & Accountants’ Association Ltd: May – June 2023

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• Digital media and marketing which includes the creation, access, storage, and viewing of audio and visual content on digital devices. Also includes web page design.

Digital Category	Examples of Eligible Expenditure for Technology Investment Boost
Digital media and marketing	Audio and visual content. Content on digital services that can be: created; accessed; stored; or viewed.
	Web page design
	Web page update costs
	Search Engine Optimisation (‘SEO’) fees
	Pay-per-click advertising
	Email marketing fees
	Photo stock commissions (used for digital media and marketing)
	Music royalty fees (used for digital media and marketing)

© National Tax & Accountants’ Association Ltd: May – June 2023

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• E-commerce or products and services that support digitally ordered or platform-enabled online transactions, mobile payment devices, digital inventory management, subscriptions to cloud-based services, and advice on digitising operations, such as guidance on digital tools to support business continuity and expansion; or

Digital Category	Examples of Eligible Expenditure for Technology Investment Boost
E-commerce	Goods and services supporting digitally ordered or platform-enabled online transactions E-commerce website set-up E-commerce website optimisation Set-up of social media store (i.e., purchase) functionality Costs associated with setting up online methods of payments Photography costs for online display Photo stock and other royalty fees associated with website costs, etc. Portable payment devices
	Digital inventory management
	Subscriptions to cloud-based services
	Advice on digital operations or digitising operations Advice about digital tools to support business continuity and growth Advice on integrating digital tools with current systems

© National Tax & Accountants’ Association Ltd: May – June 2023

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• Cybersecurity solutions for backup management and monitoring services in addition to cyber security technologies.

Digital Category	Examples of Eligible Expenditure for Technology Investment Boost
Cyber security	Cyber security systems Cyber security consultant fees Cyber security software Cyber security installation and implementation costs
	Cyber security backup management
	Cyber security monitoring services
	Cyber security upgrade services

© National Tax & Accountants’ Association Ltd: May – June 2023

A further requirement is that the technology be “wholly or largely for the purposes of an entity’s digital operations or digitising the entity’s operations.” That is, there must be a direct link to your company’s online activities.

As long as the expenses comply with the eligibility requirements, repair and maintenance costs may be claimed. When an expense has a mixed purpose (partially private and partly business), the bonus deduction is only applicable to the amount of the expense that is for business purposes.

The technology investment boost won’t pay for other expenses, like those related to hiring people, acquiring finance, building a business location, and the price of the goods and services the company offers.

The boost will not be given to:

• Property that you purchased but subsequently sold during the applicable period (e.g., on or prior to 30 June 2023).
• Capital expenditures (for example, improvements to a building used as business premises).
• Financing charges, including interest costs.
• Wage or salary expenses.
• Educating personnel on software or technology (see Skills and Training Boost).
• The cost associated with trading stocks.

Contact your Trusted Accountants at Success Accounting Group to check if you can apply!

The additional tax deduction is applied to assessable income rather than being paid to the company in cash. The deduction would enhance the tax loss if the company is operating at a loss. Whether or not the business generated a taxable profit or loss during the relevant year, as well as the applicable tax rate, will determine the monetary value of the additional deduction to the business.

Prepare your receipts and book in your Business Tax Return today!

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