The Technology Investment Boost, initially announced in the last federal budget in March and enacted into law just before the 30 June expenditure deadline, grants small businesses with a turnover of less than $50 million a 20 percent bonus deduction on technology-related expenses that support their digital operations and digitisation efforts.
This is a comprehensive measure put forth by the government, intended to encompass a wide range of business costs and assets. However, business owners are likely to have questions about what they can claim. The ATO suggests a useful rule of thumb for determining eligibility: if the small business would have incurred the expense even if they weren’t operating digitally, it may be eligible.
This boost applies to eligible expenses incurred between 7:30 PM on 29 March 2022 and 30 June 2023, with a maximum bonus deduction of $20,000 per income year. If the expenditure pertains to a depreciating asset, the asset must have been put into use or made ready for use by 30 June 2023. Using this guideline, the following costs are considered eligible:
- Consultation regarding digitising a business.
- Leasing digital equipment
- Repairs and improvement to eligible assets (but not ‘capital works’).
New and ongoing subscription costs can also be deemed eligible expenditure if they are linked to a client’s digital operations. For example, ongoing subscriptions to accounting software for business purposes or new subscriptions for digital content used in creating web content for advertising would both be eligible. In such cases, businesses are advised to maintain an explanation of how these expenses contribute to their digitisation efforts and to keep accurate records of all claims made.
The ATO has emphasised that they are unable to provide an exhaustive list of eligible expenses under this initiative, but it is designed to encompass a broad spectrum of business costs and assets associated with digital transformation. Notably, a prior list of eligible items published by the ATO in August did not include ongoing accounting software subscriptions. This list encompassed digital enabling items, digital media and marketing expenses, e-commerce-related costs, and expenditures related to cybersecurity, among other things.
