How the 2022 federal budget will help your small business get a new website and more.
Australian small and medium-sized enterprises were central to the tech upgrades and digital skills training incentives revealed in the federal budget, with the Small Business Technology Investment Boost and the Small Business Skills and Training Boost being open to businesses with an annual turnover of less than $50 million. As a result, the new 2022-2023 Australian federal budget will offer “bonus” tax deductions to SMEs that embrace digital adoption when they invest in new technology or external digital skills training for employees.
Under the new budget policies, SMEs will receive an extra 20% tax deduction for relevant expenditures. In other words, the government will allow eligible businesses to deduct $120 for every $100 they spend on services that support enhancing their digital capabilities.
Treasurer Josh Frydenberg said the additional bonus deduction was aimed at cutting the cost of small businesses going digital.
“From tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, eInvoicing, cybersecurity and web design will see them get a $120 tax deduction,” Mr Frydenberg said.
The tax breaks and investment incentives reflect Treasurer Josh Frydenberg’s promotion of a digital economy strategy that is “backing small businesses that are embracing the digital revolution”.
What does the new budget mean for your small business?
If you have been waiting on the sidelines to get a new website for your small business, now is the time to invest.
The 2022 federal budget aims to help 3.6 million Australian small businesses “become more productive and competitive” by supporting digital adoption and staff upskilling, where they would be able to claim an additional 20% deduction on costs incurred on business expenses and depreciating assets. Frydenberg said the measures will cut the cost of going digital and incentivise investment by “rewarding small businesses that invest in skills and new technology”. This makes website design packages such as those offered by MBW the perfect solution to take advantage of this tax benefit.
The new policies have been applauded by business leaders, including the Tech Council of Australia:
“These measures will help small businesses to grow and increase their productivity,” said Tech Council of Australia CEO Kate Pounder, “and to invest in improving tech skills in areas such as cyber security.” Overall, these policies can help your business modernise by upgrading and strengthening systems, skills and assets to be competitive in a digital future.
Is website design and development eligible for the bonus tax deduction?
Yes, websites are an eligible business expense, in addition to a number of related services. For example, we use AWS cloud services to manage and host your website infrastructure, meaning both the initial fee and your ongoing server fees may be suitable for the bonus deduction.
If your online presence is in need of an overhaul, now is a great time for your business to take advantage of the significant tax deductions on technology. On March 29th, Frydenberg announced that “from tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, e-invoicing, cybersecurity and web design will see them get a $120 tax deduction.”
The treasurer made it clear from his speech that the bonus covers website design and development, and other online services, including improvements to cybersecurity systems, cloud computing and subscription expenses related to digital innovation.
What is the extent of the tax deductions and savings for small business?
Under the Small Business Technology Investment Boost, small businesses will be able to claim a $120 tax deduction for every $100 they spend on digital services and technologies for the next 12 months, where the measure will support investments of up to $100,000 per year. The federal government estimates the tech package will reduce tax receipts by $1 billion over the duration of the policy.
It’s important to note that the 20% tax deduction for digital skills training under the Small Business Skills and Training Boost applies to external training for employees, meaning that business spending on in-house training is excluded. The budget document also suggests that sole traders upgrading their own digital skills through external training are not eligible for the bonus 20% tax deduction.
From 7.30 pm AEDT on Tuesday, March 29th all relevant expenditures can be claimed under the new schemes. It’s worth noting that the policies have different end dates: the technology package will end on June 30th 2023, while the training package will remain until June 30th 2024.
Please note, we do not provide tax advice and recommend speaking to your accountant to ensure your business is eligible for the additional tax deduction.