Benefits of Tax PlanningApril 19, 2023
New QBCC Reporting RequirementsJuly 17, 2023
The Federal Government just passed a bit of legislation that has been hanging around for a while now.
An additional 20% tax deduction for expenditures incurred by small businesses on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services, capped at $100,000 per income year with a maximum deduction of $20,000.
To be eligible for the bonus deduction:
- The expenditure must be eligible for deduction
- The expenditure must have been incurred between 7.30pm (AEST), 29 March 2022 and 30 June 2023
- If the expenditure is on a depreciating asset, the asset must be first used or installed and ready for use by 30 June 2023.
To be eligible, the expenditure must be wholly or substantially for the entity’s digital operations or digitising its operations. For example:
- 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 that can be created, accessed, stored, or viewed on digital devices; and
- e-commerce – supporting digitally ordered or platform-enabled online transactions.
Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria.
Where the expenditure has mixed use (i.e., partly private), the bonus deduction applies to the proportion of the expenditure that is for an assessable income-producing purpose.
The bonus deduction is not intended to cover general operating costs relating to employing staff, raising capital, the construction of the business premises, and the cost of goods and services the business sells. The boost will not apply to:
- Assets that are sold while the boost is available
- Capital works costs under Division 43
- Financing costs such as interest expenses
- Salary or wage costs
- Training or education costs
- Trading stock or the cost of trading stock
If you would like to discuss this further, please reach out to us at https://onpointadvisory.com.au/contact/