Dec 11, 2023 Matthew Hung

New ATO Guidance – Technology Investment Boost for small business

Businesses are required to invest resources to digitise their operations as we move towards the digital age.

In recognition of this, the federal government introduced a bonus 20% tax deduction for small businesses that incurred eligible technology expenditure between 7:30pm 29th March 2022 to 30th June 2023. This bonus tax deduction is claimed in the business’ 2023 income tax return, despite covering expenses from two financial years.

At the time of the announcement, the ATO had not elaborated on what would qualify as eligible technology expenditure.

While the ATO does not provide an exhaustive list of eligible expenditure, the key principle to determine eligible expenditure is the connection between the purpose of the expenditure and digitizing the business operations.

The ATO has set out the types of expenditure that businesses would typically incur:

  1. Digital enabling assets
  2. Digital media and marketing
  3. E-commerce
  4. Cyber security

Some specific examples of costs that small businesses commonly incur during the year which would qualify include:

  • software subscription costs including accounting software, inventory management & platform-apps
  • Purchasing technology assets such as laptops, mobile phones, computer equipment, computer networks or upgrading servers
  • Repairs and maintenance for technology assets
  • Investment in moving to online or platform-enabled payments
  • Advice about their business websites to support business continuity and growth
  • Monthly internet costs
  • Monthly mobile phone plan where phone and data are included in the bundled package

The eligible expenditure is limited to an annual cap of $100,000, which equates to a maximum $20,000 bonus tax deduction for each year.

Most small businesses would have spent money on technology during the eligible period.  RDL can identify eligible expenditure to claim the Technology Investment Boost and in so doing, reduce your tax liability.

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