SMALL BUSINESS TAX STIMULI FOR FY2023/24
The Federal Government has updated measures that allow small businesses to claim tax deductions for capital assets, technology investment, and skills and training. BDO has prepared this information to help you evaluate eligibility for these incentives.
Instant asset write-off for capital assets
With temporary full expensing ending as of 30 June 2023, the post-covid instant asset write-off tax stimulus for small businesses has changed .
Businesses with an aggregated turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets which:
- Cost less than $20,000 to purchase
- Are first used, or installed for use, between 1 July 2023 and 30 June
The $20,000 threshold applies on a per-asset basis – meaning small businesses can instantly write off multiple assets. Assets valued at
$20,000 or more cannot be immediately deducted. However, placing them in the small business simplified depreciation pool means they can be depreciated at 15 per cent in the first income year and 30 per cent each income year after that.
Small business skills and training boost
An additional 20 per cent tax deduction for external training courses, delivered to employees by registered training providers, is available.
To access the small business skills and training boost, a business must be a small business entity and aggregated annual turnover must be less than
$50 million for the income year in which you incur the expenditure. Additionally, the expenditure must be:
- For the provision of training to employees of your business, either in- person in Australlia, or online
- Charged directly or indirectly by a registered external training provider which is not you, or an associate of yours
- Already deductible for your business under taxation law
- Incurred between 7:30pm AEDT (or by legal time in the ACT) on 29 March 2022 and the same time on 30 June
Where the training is a component of a larger program or training course, the enrolment or arrangement relating to the relevant expenditure must also be made or entered into at or after 7:30 pm AEDT (or by legal time in the ACT) on 29 March 2022.
Small business technology investment boost
The small business technology investment boost legislation has also passed, effective 29 March 2022 until 30 June 2024.
Businesses with an aggregated annual turnover of less than $50 million can deduct an additional 20 per cent of digital operations expenditure, including expenses incurred for the digitising of operations, and depreciating assets such as portable payment devices, cyber security systems, or subscriptions to cloud based services.
A $100,000 annual cap on expenditure will apply to each qualifying income year. Businesses can continue to deduct expenditure over $100,000 under existing law.
BDO COMMENT
Temporary full expensing is still available for the financial year ended 30 June 2023, which should be considered and – where possible – applied prior to lodgement of a business’ 2023 Income Tax Return.
It is important when purchasing assets that the invoice clearly separates individual assets, and that assets are on hand and “ready for use” prior to 30 June 2024.
For more information, or to discuss these tax opportunities in the context of your business, please reach out to BDO via the Coffee Commune network.
MATTHEW ALLINGTON Partner, BDO