A bonus technology boost tax deduction has just passed parliament. Chartered accountant GAIL FREEMAN has the details…

Ritchie came to see me certain there was a special tax deduction in relation to technology expenditure, but couldn’t find any information about it.

“The legislation only passed through parliament on June 23, though it applies from 7.30 pm on March 29, 2022 until June 30, 2023. It’s taken well over a year to become law,” I reassured him.

“The way it works is that your business needs to have a turnover of less than $50 million, which we know it is in your case.

“You can then claim a bonus deduction of 20 per cent of eligible expenditure, net of GST. The bonus deduction is calculated on what is described as ‘digital adoption’ of up to $100,000 a year up to a maximum claim of $20,000 a year.

“Just to add to the confusion, any claim you have for the financial year ended June 30, 2022 is claimed in your return for the financial year ended June 30, 2023. So the expenses for 2022 are claimed in the 2022 tax return and the bonus is claimed in the 2023 tax return.”

I told him that all other relevant expenses were claimed in the usual way as deductions or depreciation. There was a special box in the company tax return where the bonus deduction for both years can be claimed up to a maximum of $40,000.

The expenses that could be claimed includes computer hardware, purchase of laptops and tablets (subject to the depreciation rules), computer software, cyber security systems, subscriptions to cloud-based services, digital media and marketing as well as e-commerce costs.

“You can also claim internet costs, portable payment devices and advice on digital items to support business continuity and growth,” I said.

Ritchie said that it looked like all his IT and technology expenditure since March 29 last year was subject to the 20 per cent bonus.

I replied: “Yes, that’s the case, but there are also some exclusions. You can’t claim salary and wages, the cost of capital works, financing costs including interest, training or education costs (which are subject to a separate bonus) and expenses that form part of your trading stock.

“If your item is used partly for business purposes and partly for personal use, then the expenses need to be apportioned in the normal way.

“Just to add, if they are used in the production of exempt income, there is no claim.”

The skills and training boost, which also became law on June 23, may also provide a 20 per cent bonus deduction for eligible expenditure on skills and training.

“However, looking at the training that you have provided to your staff, Richie, over the relevant period, none of the providers appear to be registered,” I said.

“You can check whether the training providers you used were appropriately registered by checking on training.gov.au. If they were not registered, you have no claim”

Ritchie said while it was a little complex, he would retrieve his invoices to check for GST and claim the technology boost.

If you want the most up-to-date tax information contact the expert team at Gail Freeman & Co Pty Ltd on 02 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.