Small Business Technology Investment Boost

What is the Small Business Technology Investment Boost?

The Small Business Technology Investment Boost provides a bonus 20 % tax deduction for eligible expenditure incurred on expenses and depreciating assets that support digital operations.

Accountants, looking to help your clients maximise their tax benefits?

We can help with the R&D tax incentive. 

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Background

The Small Business Technology Investment Boost is a scheme to support small businesses to take advantage of digital technologies, which are key to a stronger, more productive and resilient economy.

The Small Business Technology Investment Boost was introduced in the 2021-2022 Federal Budget and is available for eligible expenses incurred from 1 April 2021 to 30 June 2023.

Accountants, are your clients missing out? Guide them through the complexities of R&D tax incentives. Contact Us or call 1300 658 508.

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Funding

The Small Business Technology Investment Boost provides a tax incentive of 20% on eligible expenses, up to a total of $100,000 per year per business.

The Small Business Technology Investment Boost has a funding pool of $1.2 billion and is available for up to 60,000 eligible businesses.

Eligible Expenditures

The eligible expenses for the Small Business Technology Investment Boost include:

1. Eligible depreciating assets
2. Eligible expenses related to software
3. Eligible expenses related to certain IT services
4. Eligible expenses related to certain training programs

The maximum deduction available under the Small Business Technology Investment Boost in Australia is $100,000.

This means that eligible small businesses can claim a tax deduction of up to $100,000 for their eligible expenses incurred under the Boost.

The deduction is calculated as 20% of the eligible expenses, up to a maximum of $100,000.

Accountants, ensure your clients are claiming all eligible expenses. Learn how R&D tax incentives could complement the Small Business Technology Investment Boost. 

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Top 10 expenses to claim

Based on the eligible expenses criteria for the Small Business Technology Investment Boost program, here are the 10 most common expenses that small companies in Australia may claim:

1. Computer Hardware: Investments in laptops, desktops, and servers necessary for business operations.
2. Software Solutions: Purchase or upgrade of business software like accounting, payroll, and customer relationship management (CRM) systems.
3. Website Development: Costs associated with enhancing a business website or adding new functionalities to it.
4. Communication Devices: Costs of necessary communication equipment like phones and video conferencing tools that are used entirely for business purposes.
5. Office Equipment: Expenses incurred on office devices like printers, scanners, and photocopiers used for business operations.
6. Security Systems: Investments in cybersecurity software or other technologies to protect business data and information.
7. Server Upgrade: Costs related to upgrading the business server to improve its performance or expand its capacity.
8. Cloud Services: Subscription or setup costs for cloud storage or other cloud-based services for business data and systems.
9. POS Systems: Expenses incurred for the purchase or upgrade of POS systems, like cash registers or card readers.
10. Technology Upgrades: Costs for upgrading existing technology infrastructure, including hardware and software, to enhance business operations.

Expanded expenses list

Here is a list of the expenses you may be able to claim under the Small Business Technology Investment Boost.

Eligible Depreciating Assets:

1. Laptops
2. Desktop Computers
3. Tablets
4. Smartphones
5. Printers
6. Scanners
7. Point-of-Sale (POS) Systems
8. Projectors
9. Cameras

Eligible Software-Related Expenses:

1. Purchase of Off-the-Shelf Software
2. Custom Software Development
3. Software Subscriptions
4. Licensing Fees for Software
5. Software Upgrades and Maintenance
6. Web Development Costs
7. Customer Relationship Management (CRM) Software
8. Accounting Software
9. Design Software
10. Inventory Management Software

Eligible Expenses Related to IT Services:

1. Cloud Computing Services (e.g., AWS, Azure)
2. Data Storage and Retrieval Services
3. Cybersecurity Services
4. Managed IT Services
5. IT Consulting Services
6. Disaster Recovery Services
7. Web Hosting Services
8. Voice over Internet Protocol (VoIP) Services

Please note that these are just examples and not an exhaustive list. It’s important to check the eligibility criteria and consult a professional tax advisor for specific advice on your business’s situation.

Worked Example

EXAMPLE 1

ABC Consulting is a small business that provides IT consulting services to other businesses. To improve their service delivery and productivity, they decide to upgrade their hardware and purchase some software tools. Here are their eligible expenses and the tax benefit they can claim under the Boost:

Eligible depreciating assets:

• 5 laptops @ $1,500 each = $7,500
• 2 desktop computers @ $2,000 each = $4,000
• 1 printer @ $500 = $500 Total eligible expenses = $12,000

Eligible expenses related to software:

• 1 CRM software subscription @ $500/month for 12 months = $6,000
• 1 accounting software purchase @ $3,000 Total eligible expenses = $9,000

Total eligible expenses under the Boost = $21,000 Tax benefit = 20% of $21,000 = $4,200

Therefore, ABC Consulting can claim a tax deduction of $4,200 in their tax return for the income year in which the eligible expenses were incurred.

EXAMPLE 2

XYZ Retail is a small business that operates a retail store selling clothing and accessories. To expand their customer base and increase sales, they decide to develop an e-commerce website and run some digital marketing campaigns. Here are their eligible expenses and the tax benefit they can claim under the Boost:

Eligible expenses related to software:

• E-commerce website development @ $25,000 Total eligible expenses = $25,000

Eligible expenses related to certain training programs:

• Digital marketing course for staff @ $2,000 Total eligible expenses = $2,000

Total eligible expenses under the Boost = $27,000 Tax benefit = 20% of $27,000 = $5,400

Therefore, XYZ Retail can claim a tax deduction of $5,400 in their tax return for the income year in which the eligible expenses were incurred.

Please note that these are just examples and not an exhaustive list of eligible expenses. The eligibility criteria and tax benefit may vary depending on the specific circumstances of each business.

Are you an accountant with clients developing products? We can help optimise their tax returns with R&D incentives. Book a Meeting or call 1300 658 508.

How to claim the technology investment boost

To claim the Small Business Technology Investment Boost in Australia, eligible businesses need to include the eligible expenses and the tax deduction claimed in their tax return. Here are the steps that businesses need to follow to claim the Boost:

1. Make eligible purchases: Make eligible purchases of depreciating assets and certain expenditure related to software and certain training programs.

2. Keep records: Keep records of all the eligible expenses incurred, including invoices, receipts, and other relevant documentation.

3. Complete tax return: Include the eligible expenses and the tax deduction claimed in the business’s tax return for the income year in which the eligible expenses were incurred.

4. Identify eligible expenses: Identify the eligible expenses and include them in the relevant section of the tax return. For example, eligible depreciating assets should be included in the Capital Allowances section of the tax return.

5. Calculate tax deduction: Calculate the tax deduction based on 20% of the eligible expenses, up to the maximum cap of $100,000.

Checklist

1. Have you purchased any equipment, software or provided training to your employees since 1 July 2021?
2. Were the above expenses incurred for the purposes of your business?
3. Were the above expenses incurred before 30 June 2023?
4. Did you keep records of all the eligible expenses incurred, including invoices, receipts, and other relevant documentation?
5. Can you determine the total amount of eligible expenses incurred by your business?
6. Were the expenses used or installed ready for use in your business?
7. Were the eligible training programs provided to your employees and related to improving your business’s capabilities, productivity, or capacity?
8. Were the eligible expenses subject to any other government grant or program?
9. Have you claimed a tax deduction for the same expenses in any other tax year?
10. Do you need help understanding the eligibility criteria or how to claim the Boost?

Accountants, need assistance in navigating these criteria for your clients? Our R&D tax experts can guide you. Call Now or Schedule a Meeting.

More Information

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Accountants, help your clients make the most of their R&D activities. For specialist advice, 

Book a Meeting or call 1300 658 508 today.