Did you know you can get an easy tax boost by claiming a host of expenses incurred in the digitisation of your small business?

The federal government and the ATO are keen for small businesses to adopt newer technology and better and more innovative ways of doing work. To help you out, there’s some juicy incentives being dangled.

It’s called the ‘small business technology investment boost’, and can be claimed for a variety of digitalisation expenses, including your accounting software, but a heck of a lot more too…

So, what’s the small business technology boost?

According to the ATO:

“Small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction to support their digital operations and digitise their operations.”

The 20% technology boost can be applied to eligible expenditure incurred between 29 March 2022 and 30 June 2023.

The technology boost is designed for eligible technology-based business expenses and depreciating assets and is capped at $100,000 per income year. That means the 20% will give you a maximum bonus deduction of $20,000 per income year.

Eligibility criteria

To be eligible, you need to be an Australian small business with a turnover less than $50 million. The expense in question must be already a deductible expense under current tax laws and the expense must have been incurred between 29 March 2022 and 30 June 2023.

What’s included in the small business technology investment boost?

What exactly can you claim? While the ATO has given guides and examples, it has not provided an exhaustive list. However. It should be relatively easy to figure out what’s eligible through, and your accountant or tax agent can certainly pick out any ineligible claims before they go any further.

The kind of claims you can make:

  • Digital enabling items and devices – devices that support digitisation such as computers, phones, software, internet costs, systems and services.
  • Digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design.
  • eCommerce – any goods or services which support digital or online ordering or other online transactions. This also includes portable payment devices, POS technology, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations.
  • Cybersecurity – you can also claim any cybersecurity systems or technology you invest in, as well as backup management and monitoring services.

Why is small business digitisation being encouraged?

There’s a host of reasons why the government is encouraging and subsidising the uptake of cloud software, newer tech, and more efficient ways of working.

Although not specified by the ATO, the recent 2023 Intergenerational Report pointed to the need for modernisation and digital tech uptake to weather the economic storm that will hit over the next four decades as an ageing population draws on public funds. This will mean that an innovative and efficient private sector will need to be cultivated. The government wants to encourage this to create a stronger economy.

Then there’s more direct reasons – if you look to initiatives like Single Touch Payroll, you’ll see that the payroll reporting process has been simplified and automated through the mandated use of cloud payroll software. You can then look to other digital initiatives like myGov to see a broader move toward software reporting and digital record keeping – we’re certainly going to see more of this, so encouraging digitisation now makes perfect sense.

It’s also about competitiveness. A business that embraces better ways of working and better solutions will be more efficient and competitive – meaning business will thrive more easily, assisting small business owners as well as the economy as a whole.