The March 2022 budget introduced a bonus extra 20% deduction for technology expenditure for small businesses. In simple terms this means that if you spend $100 on eligible items you get to deduct $120 from your profits and therefore pay less tax. It will be capped at $100,000 of expenditure.
Due to the slow process of passing budgets this is not yet law, however if it passes you need to be ready. Good record keeping will be essential as the bonus relates in part to expenditure that will have been claimed in already lodged returns.
The bonus deduction applies to expenditure incurred between 29 March 2022 and 30 June 2023. Note that this covers two tax years, one of which for most business will already be lodged. Don’t panic – the additional deduction for 2022 expenditure will be claimed in the 2023 tax return – we think!
While we wait to see if this is enacted, small business owners should start to consider whether you could bring forward any expected technology spend to before 30 June 2023. You should also start to make a list of what you have already spent since 29 March 2022. It is expected that eligible expenditure will include items such as laptops, printers, smartphones, POS systems, software subscriptions, web development, cloud computing services (eg AWS, Azure) and accounting software (eg MYOB/Xero).
As more details emerge we will keep you updated.
Lindsay 0413 952180