The proposed measure provides $1 billion to support small business (aggregated annual turnover of less than $50 million) to digitalise their operations with a new bonus tax deduction. Those that qualify will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digitalisation.
The bonus deduction applies for expenditure incurred between 29 March 2022 and 30 June 2023 and applies for expenditure on relevant items up to $100,000 per annum. Expenditure above this threshold can of course be deducted in accordance with existing law.
How to Claim the Technology Investment Boost
The expenditure incurred on relevant items in the 2022 financial year, taxpayers can claim the expenditure as usual in the 2022 tax return, and claim the additional 20% bonus deduction for this period in the 2022/23 tax return.
For expenditure incurred on relevant items in the 2023 financial year, taxpayers can deduct the entire 120% in the 2023 tax return.
The ATO will provide further details on eligible expenses once the law has been passed.