As the federal government attempts to encourage digital adoption, small firms will be allowed to deduct an additional 20% of the cost of cloud services and cyber security systems.
The government announced the “technology investment boost” in its fiscal year 2022-23 budget, with the policy taking effect immediately and lasting through the end of June 2023.
“Beginning today, for every hundred dollars these small businesses spend on digital technology… they will receive a $120 tax break,” Treasurer Josh Frydenberg stated during his budget speech.
According to budget papers, businesses with an annual revenue of less than $50 million would be eligible to claim the reduction on “expenditure up to $100,000.”
Cloud-based services, cyber security systems, and portable payment devices have been identified as appropriate “enterprise costs and depreciating assets that enable… digital adoption.”
The change is likely to lower tax collections by $1 billion over the following four years, albeit the Australian Taxation Office will not notice this until 2023-24.
Payments will also rise by $7.2 million beyond the forecasted amount.
According to budget materials, “the increase for qualified expenditure incurred by 30 June 2022 will be claimed in tax returns for the next income year.”
“The increase for qualifying expenditure incurred between July 1, 2022 and June 30, 2023 will be reflected in the income year in which the expenditure is made.”
