Small businesses that spend on new technologies and training courses to upskill staff will be able to claim 120% of the costs as deductions, as part of budget measures that will cost the government $1.6bn in tax revenue.
For the estimated 3.6m businesses with an annual turnover of less than $50m, eligible costs incurred from Tuesday evening can be deducted from their taxable revenue at an amount greater than what was actually spent.
The budget also includes several other initiatives for small businesses, including $4.6m over two years for free Beyond Blue mental health support for entrepreneurs.
The Fair Work Commission will also be given $5.6m over four years to establish a dedicated unit for dealing with unfair dismissals and industrial protection disputes for small businesses.
The Technology Investment Boost allows businesses to claim the bonus 20% deduction for the cost of expenses and depreciating assets, such as portable payment devices, cybersecurity systems and subscriptions to cloud-based services.
An annual cap of $100,000 will apply to eligible technology expenditure, with the initiative set to last until 30 June 2023.
In his budget speech, the treasurer, Josh Frydenberg, said he hoped the technology scheme would encourage small businesses “that are embracing the digital revolution” by rewarding those that invest in new technologies.
“From tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, e-invoicing, cybersecurity and web design will see them get a $120 tax deduction,” Frydenberg said.
The Skills and Training Boost will also cover spending incurred by eligible businesses from Tuesday, and will last until 30 June 2024.
There is no limit on how much spending on training courses can be deducted by a small business at the bonus rate of 120%, but certain rules apply, such as that the course must be run by an external education provider, which needs to be registered in Australia.
In-house and on-the-job training is not eligible, nor is money spent training people who are not employees of the business. The courses can be provided in person (only in Australia) or online.
Frydenberg said the skills initiative was designed to help small businesses “become more productive and competitive”.
“No one knows better than a small business owner what skills they need in their employees,” he said.
The Technology Investment Boost is budgeted to cost $1bn in forgone tax revenue over the life of the scheme, while the Skills and Training Boost will similarly reduce tax revenue by $550m.
Frydenberg claimed his government had helped small businesses more than any other, with the lowest tax rates in 50 years.
“Small and family businesses are at the heart of our economy and local communities,” he said.
“Lower taxes for small business is part of our plan for a stronger future.”
