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Bonus 20% deduction to SMEs in Australia

Exposure draft legislation for an extra 20% deduction for qualifying expenditures encouraging digital adoption by small and medium-sized firms has been released by the government.

Businesses with a combined yearly turnover of less than $50 million are proposed to be eligible for the increased deduction. Spending must directly relate to an entity's digital activities for its business in order to be eligible.

Tax Deduction Boost for small business in Australia
Extra 20% Deduction for Small Business

Training for non-employee business owners, such as sole traders, partners in a partnership, and independent contractors, will not be eligible for the extra deduction.

The following requirements must be met for employee external training expenses to be eligible:

  • The cost must be billed, directly or indirectly, by a training provider who has registered with the government and be for training that falls under the provider's registration's purview (if applicable).

  • The expense must already be deductible in accordance with tax legislation, and the registered training provider cannot be the entity requesting the additional deduction or a member of the entity.

  • Only expenses incurred between 7:30pm (AEDT) on March 29, 2022, and June 30, 2024, will be eligible for the increased deduction. When the enrolment or arrangement takes place at or after 7:30pm (AEDT) on March 29, 2022, the expense must be for the provision of training.

The policy was introduced in the budget year 2022–2023 of the previous administration. Responses to this consultation may be submitted up to September 19, 2022, by interested parties.

For more information please contact us.

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