Small business tax breaks pass Parliament

On Wednesday, the Senate voted in favour of the Treasury Laws Amendment (2022 Measures No. 4) Bill 2022, which allows a small business to deduct 120 per cent of the cost of training their employees and 120 per cent of the cost of digitalising their business.

The policies cover up to $100,000 each, which equates to what is effectively a $20,000 deduction.

Chartered Accountants Australia and New Zealand (CA ANZ) encouraged small businesses to act now if they want to benefit from a tax incentive to train their employees and digitise their business.

“With small businesses facing worker shortages, the incentive to train new and existing staff is a great initiative,” said Susan Franks, CA ANZ senior tax advocate.

“The 120 per cent deduction for training employees will apply in relation to expenditure incurred by a small business from 29 March 2022.”

Both incentives have a limited availability. The Skills and Training Boost will allow small businesses to claim relevant training costs until 30 June 2024.

“Businesses should be aware however, that they must comply with some simple guidelines to qualify for the deduction and be mindful of the impact of the expenditure on their operations,” Ms Franks said.

The guidelines include that the training is restricted to employees, it must be conducted by a recognised provider, and in person training must be done in Australia, however overseas employees can only be trained digitally.

The Technology Boost, which was originally introduced by the previous Liberal government in its March 2022 budget, ends on 30 June 2023.

“It’s a win for small businesses who’ve already spent money digitalising their business this financial year but for those who haven’t, the window to act is very small,” Ms Franks said.

“This 120 per cent deduction only passed Federal Parliament yesterday, but small businesses looking to spend money on digitisation, only have until June 30, 2023 to take advantage of the incentive.

“Small businesses should also be aware; they can only claim the 120 per cent deduction to digitise their business for up to a maximum of $100,000 of expenditure.”

Treasurer Jim Chalmers said the $1.55 billion investment would help boost productivity and scale up small businesses.

“We recognise how important the small-business community is to this country and to our national economy – that’s why we want to create more opportunities for them to grow and prosper,” the Treasurer said.

“When small businesses invest in digital technologies and upskilling staff, it boosts their productivity and drives economic growth.

“That’s why we are making them law and backdating deductions so businesses are rewarded for the investments they’ve been making and can take advantage of this extra support.”

Assistant Treasurer and Financial Services Minister Stephen Jones added: “The government is investing in small businesses, so they can upskill employees, remain competitive in a rapidly changing technological landscape, and take advantage of new opportunities for growth.

“Millions of small businesses that have already invested in new technology this financial year will now be eligible to make deductions this tax time. It’s great news at a time where small businesses most need cash flow support.”