In a bid to empower small businesses and pave the way for digital transformation, the government introduced the technology investment boost as part of the 2022–23 Budget. This initiative aims to support small businesses by providing them with a unique opportunity to deduct an additional 20% of their expenditure for business digital operations and the digitisation of their processes. With the measures becoming law on 23 June 2023, small businesses now have the chance to leverage technology and enhance their competitiveness in the market. 

  

Who can apply?

Small businesses with an aggregated annual turnover of less than $50 million are eligible to apply for the technology investment boost. Whether you’re a retail store, a service provider or a manufacturing unit, this initiative caters to a wide range of small businesses across various industries. 

Time period

The technology investment boost is applicable for two specific time periods: 

• Period 1: From 7:30pm (ACT) on 29 March 2022 until the end of the income year  
• Period 2: From the start of the income year specified in the first period until 30 June 2023 

Eligible expenditure

To qualify for the bonus deduction, the expenditure must be directly linked to your business’ digital operations. The eligible expenditure includes, but is not limited to the following categories: 

Digital enabling items

• Computer and telecommunications hardware and equipment 
• Software 
• Systems and services that form and facilitate the use of computer networks 

Digital media and marketing

• Audio and visual content accessible on digital devices 

E-commerce

• Support for digitally ordered or platform-enabled online transactions 

Cybersecurity

• Cybersecurity systems, backup management, and monitoring services. 

Cap on bonus deduction

There is a cap of $100,000 for each time period for the total eligible expenditure. This means that each entity can claim a maximum bonus deduction of $20,000 per period. 

Calculating and claiming the bonus deduction

The bonus deduction is calculated as 20% of the total amount of eligible expenditure, up to the cap. It is important to note that the bonus deduction is intended to be a one-off deduction that does not affect any other deductions in the taxation law. 

For depreciating assets, the bonus deduction applies only if the asset is used or installed for use by 30 June 2023. Regardless of the depreciation method your company employs, this bonus deduction is equivalent to 20% of the cost of the eligible asset. 

If your business is registered for GST, the bonus deduction is generally calculated on the GST-exclusive amount of expenditure. 

Exclusions

While the technology investment boost aims to support small businesses in their digital transformation journey, certain types of expenditure are ineligible for the bonus deduction. These exclusions include: 

• Salary and wage costs 
• Capital works costs 
• Financing costs 
• Training and education costs 
• Expenditure that is part of or included in the cost of trading stock. 

Conclusion

The technology investment boost opens up new avenues for small businesses to embrace technology and drive growth. By providing a bonus deduction on eligible expenditure, the government is fostering an environment where small businesses can thrive in the digital era. Now is the time for small businesses to seize this opportunity, enhance their digital operations, and position themselves for long-term success in the competitive market landscape. 

For more information on how to benefit from the small business technology investment boost and to explore how Regency Partners can assist your small business, contact us today. Our team of experts are ready to guide you through the process and help you unlock the full potential of your business.