Training and Technology Tax Boost for Small Business Explained

The budget was handed down by the federal government on Tuesday 29th March. We won’t dive into every area of the budget, there are plenty of articles that have done that.

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Instead, we’ll look specifically at two areas that have a big impact on small businesses. These are the skills and training boost and the technology investment boost.

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Treasurer Josh Frydenberg said "starting tonight, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction, helping them become more productive and competitive."

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There was a similar 120% incentive for digital technology spend.

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These incentives are only available to businesses that turnover less than $50 million. 

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Skills and Training Boost

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As everyone has no doubt heard, we’re in the midst of the great resignation. This has seen critical skill shortages across almost every industry. Retention rates have dropped and businesses are struggling to keep up with demand, especially given the cost to train and onboard new employees. The Skills and Training Boost has been brought in to help with staff retention and create the necessary expertise required to continue to grow our economy.

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The benefit is this:

There is an extra 20% bonus tax deduction (now 120%) available for small businesses on money spent on training.

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What’s the catch?

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There are two conditions that we’re aware of so far. We’ll learn a lot more once the legislation is enacted but at this moment:

1. The training must be provided by an external organisation (it doesn’t apply internally),
2. That external organisation must be a company registered within Australia.

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Technology Investment Boost

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The technology investment boost aims to help businesses bolster their digital capability. 

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The benefit is this:

A bonus 20% deduction for the cost of expenses and depreciating assets on eligible assets, up to $100,000 per year.

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There has been some guidance on what constitutes eligible expenditure. The Prime Minister’s media release has said it includes items such as portable payment devices, cyber security systems and subscriptions to cloud-based services.

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What is a tax deduction?

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For those of us that aren’t tax fanatics, we’ll briefly touch on what a tax deduction is. A tax deduction is subtracted from a company's taxable income.

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Total revenue, minus tax deductions will give you your total taxable income. That is then applied against your tax rate to determine the total tax owed. More tax deductions means less taxable income, which results in less tax owed.

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Are etrainu customers covered?

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Without knowing all the specifics just yet, it looks likely that our customers are set to benefit. etrainu is registered within Australia and provides courses as an external training provider.

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As long as the small business criteria (turnover under $50 million) is met, it’s a great time to be an etrainu customer.

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Give it to me in dot points:

• The deduction used to be 100% for training and digital assets.
• It’s now 120% for businesses with under $50 million in turnover.
• It applies as of 29 March 2022 at 7:30pm.
• It’s capped at $100k for eligible digital assets.
• We’re still waiting for the legislation to be passed which will give more specifics.
• Everything looks positive if you’re an etrainu customer.

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