Australian businesses upgrading their digital skills and equipment will receive $1.6 billion in tax relief under a plan put forth by the 2022 federal budget that will come into effect tonight.
In a package reflecting the massive economic potential of emerging digital sectors, small businesses with annual turnover of less than $50 million will be free to deduct an extra 20% of the cost of workplace expenses that support their digital uptake.
Businesses will be able to claim that “bonus” deduction on up to $100,000 of expenditure a year, budget papers show.
The so-called Technology Investment Boost will apply to any purchases made between 7.30pm tonight, March 29, 2022 and June 30, 2023, government documents say.
The package will help SMEs grow their capacities in cloud computing, e-invoicing and accounting, Treasurer Josh Frydenberg said in his budget speech.
All told, the tax break is slated to cost $1 billion.
The budget also proposes tax breaks for small business that fund digital training and upskilling for staff.
Like the Technology Investment Boost, the Skills and Training Boost equates to 20% of eligible expenses.
It means that a small business that spends $100 on training employees will get a $120 tax deduction, Frydenberg explained.
This also comes into effect 7.30pm, but will extend until June 30, 2024.
The measure is projected to result in $550 million in tax relief for participating businesses.
Business groups have long called for tax relief targeted at Australian firms undertaking a digital transition, claiming such enticements will reap dividends in the long run.
In February, CPA Australia’s senior manager of business policy Gavan Ord told SmartCompany Australia’s SME community lags behind regional competitors like Singapore in terms of digitisation, leaving it underequipped to compete on the global stage.
“Small businesses account for around 97-98% of all businesses in Australia and employ a significant chunk of our population,” Ord said.
“It’s in the public interest and Australia’s economic interests to support small businesses to improve their digital capability.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
