Skills Training and Technology Costs 120% Deduction

After delays and quite a lot of uncertainty the new Albanese Labour Government has revived the 120% skills training and technology deductions form small and medium businesses. A measure announced by the previous Morrison Government has now been adopted by the current Government.

Two investment boosts for “Skills and Training” as well as a “Technology Investment Boost” will be available to businesses with an aggregate turnover of less than $50 million.

Skills and Training Boost

Applies to expenditure incurred on external training courses provided to employees between 7:30 pm on 29 March 2022 (AEST Time) until 30 June 2024. However, the business will not be able to claim the “boost” portion of the deduction (20%) until the 2023 financial year.

Eligibility

External training courses need to be provided to employees in Australia in person or online and delivered by a training organisation registered in Australia. The training needs to be necessarily incurred in in carrying on a business for the purpose of gaining or producing assessable income.

Only the amount charged by the training organization is deductable and this may include incidental costs such as books and training manuals but inly if it is charged by the training organisation

To be eligible to claim the 20% boost deduction the following criteria must be satisfied:

• The expenditure incurred must be for training employees either in person in Australia or online

• The expenditure must be charged directly or indirectly by a registered training provider and be for training within the scope of the provider’s registration

• The registered training provider must not be the small business or an associate of the small business

• The expenditure must be deductible

• Enrolment for the training must be on or after 7:30 pm on 29 March 2022

Not eligible

• Sole traders, partners in a partnership, independent contracts who are not employees

• Associates of the business: relatives, spouse or partner of an entity or person, a trustee of a trust that benefits an entity or person and a company that is sufficiently influenced by an entity or person.

 Technology Investment Boost

Applies to expenditure incurred on business expenses and depreciating assets that support digital adoption. Items such as portable payment devices, cyber security systems or subscriptions to cloud-based services.

A Cap of $100,000 per income year applies with a maximum bonus deduction of $20,000 per income year. Repairs and maintenance can also be claimed as long as the eligibility criteria below is met.

To be eligible to claim the 20% boost deduction the following criteria must be satisfied:

• The expenditure must be eligible for a deduction

• The expenditure must have been incurred between 7:30 pm (AEST) ON 29 March 2022 and 30 June 2023

• If the expenditure is incurred for a depreciating asset, the asset itself must be first used or installed ready for use by 30 June 2023

• The expenditure must be wholly or substantially for entity’s digital operations, items such as

o   Computer and telecommunications hardware and equipment as well as systems and services which facilitate the use of computer networks

o   Audio and visual content that can be created accessed stored and viewed on digital devices

o   Assets supporting e-commerce, enabling online transactions

Not eligible

• 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

Please note that this article is assuming that the legislation has passed the Parliament and that there will be no amendments to the dates above

Need Cordner Advisory to help?

If you would like more information or need any assistance regarding the above, please do not hesitate to contact us on (07) 5504 5700 to speak to one of our trusted advisors today.

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