Mar 16, 2023 Andrew Low

Let’s get digital!

In what seems a lifetime ago, the previous Liberal government announced a range of small business support measures as part of their 2022-23 Budget, which included a new ‘Small Business Technology Investment Boost’. Fast-forward 6 months, an election and a change in government later, the bill was finally introduced into the House of Representatives in November 2022.

The proposed measure seeks to provide small businesses with a bonus 20% deduction (up to a cap of $20,000 i.e. $100,000 in expenditure) for eligible expenditure wholly or substantially incurred in supporting the businesses’ digital operations. This would include business expenditure on things such as:

• Digital enabling items – computer and telecommunications hardware and equipment, software, systems and services that form and facilitate the use of computer networks
• Audio and visual content that can be created, accessed, stored or viewed on digital devices
• E-commerce platforms that enable online transactions

To be eligible for the bonus deduction, you must be a small business, which is normally defined as a business with a turnover of less than $10 million. For the purposes of the Small Business Technology Investment Boost however, the definition has been expanded to include businesses with a turnover of less than $50 million. This would mean that 98% of businesses in Australia would be eligible for this initiative if enacted as law.

Measures such as these are generally retrospective, with the proposed start date for this particular measure being 7:30pm (AEST) on 22nd of March 2022 – the date of the announcement. The proposed end date is the 30th of June 2023, meaning that the additional deduction could be claimed in up to two separate financial years. Given that the 2022 financial year has already elapsed and many taxpayers have already lodged their 2022 tax returns, the bonus deduction relating to the 2022 financial year will generally be able to be claimed in the business’ 2023 tax return.

As the bill (as currently proposed) is yet to be enacted, nothing has been set in stone. However, if you have incurred any costs on digitising your business in the 2022 or 2023 financial years, now would be a good time to check if any of the expenditure will be eligible for the bonus deduction.

If you’re unsure if this bonus would apply to your business, contact your RDL advisor.