Did you hear?
In this year’s Australia Federal Budget, the government will introduce a technology investment boost that will apply to eligible expenditures. The program is designed to motivate SMEs to invest in digital or subscribe to cloud-based services. Here’s what you need to know about this program and how it can benefit your business.
What does it mean?
The Digital Investment Tax Boost will lower the barriers to going digital by encouraging businesses with less than $50m annual revenue to invest. The technology investment boost enables a ‘bonus’ 20% tax deduction on expenses, including subscriptions to cloud-based services. This means a $120 tax deduction for every $100 spent on digital tools and training.
Are there any conditions attached?
As a new initiative from the Australia Government, of course, there are conditions! Although discussions and measures are still ongoing, the initiative hasn’t yet been passed into law. Even so, given the hype, the time to begin your budget process is now. Kick-off a new project or use this initiative to support an existing business case for digital transformation.
The important conditions to note are:
- Applies to eligible expenditure incurred from 7:30 pm 29 March 2022 – 30 June 2023
- It is not yet passed into law
- Keep in mind that the additional deduction on any costs incurred in FY22 cannot be claimed until FY23.
- Also, remember that if you want to apply for the TFE, the asset needs to be installed and ready for use by 30 June 2023, so watch out for those lead times on capital assets, and plan ahead!
The time to start building your business case is now.
Who can get it?
Small Australian businesses (those with an annual turnover of less than $50 million) will be entitled to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support digital adoption, such as subscriptions to cloud-based services. There is an annual cap of up to $100,000, meaning that a maximum $120,000 deduction.
What other benefits are available?
This increased digital adoption will ensure SMEs have the tools to remain competitive while securing billions for the Australian economy. It also allows SMEs to invest in technology to better their businesses and remain relevant in industry. And it will significantly increase funding to assist small businesses to improve their capability and capacity to digitally transform.
If you’ve been holding off revamping your outdated legacy operating systems, now could be the perfect time to begin the conversation. Let’s see how we can help streamline your operational capability and take advantage of this incentive.