ATO reminder to check if you can claim the small business technology investment boost

The ATO advises taxpayers to check if they can claim a 20% bonus deduction on technology expenditure to help digitise their small business.

Small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction to support their digital operations and digitise their operations. The boost applies to eligible expenditure incurred between 7.30pm (ACT time) on 29 March 2022 and 30 June 2023.

The boost is for business expenses and depreciating assets and is capped at $100,000 of expenditure per income year. Taxpayers can receive a maximum bonus deduction of $20,000 per income year.

In order for the small business technology investment boost to apply, the business needs to be a ‘small business entity’, with an aggregated annual turnover of less than $50 million for the income year in which the expenditure was incurred.

If the expenditure was on a depreciating asset, the asset must have been first used or installed ready for use for a taxable purpose by 30 June 2023.

Eligible expenditure may include, but is not limited to, business expenditure on:

• Digital enabling items – computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks;
• Digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design;
• E-commerce – goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth; and
• Cyber security – cyber security systems, backup management and monitoring services.

Where the expense was partly for private purposes, the bonus deduction can only be applied to the business-related portion.

If a business is registered for GST and the expenditure was not GST-free, the bonus deduction is calculated on the GST-exclusive amount plus any GST the taxpayer cannot claim as a GST credit incurred in carrying on the business.

There may be fringe benefits tax consequences associated with the expenditure incurred.

Taxpayers can refer to 'Fringe benefits tax - a guide for employers' on the ATO's website for more information. Taxpayers can refer to the ATO’s website for more information in relation to whether they are eligible for this deduction, and (if they are) how they can claim it.

To find out more about the small business technology investment boost, visit the ATO website.

At Trinity Advisory, we specialise in tax accounting, advisory services, and business coaching for small businesses located in and around Cairns (116 Mulgrave Road, Parramatta Park QLD 4870) and the Sunshine Coast (2/8 Maroochydore Road, Maroochydore QLD 4558).

Should you need any taxation or accounting advice for your business, get in touch with Trinity Advisory today. Our team of expert Business Accountants, Advisors and Coaches are here to help!

Ref: ATO website, Income and deductions for business, 4 August 2023