20% Bonus Tax Deduction for Small Businesses Investing in Skills and Training

First published on May 16, 2022
Last updated on May 23, 2023
We explain how tourism businesses can access a 20% bonus tax deduction under the government’s Small Business Skills and Training Boost.

Get more tax back when you invest in educating yourself and your staff!!

In this article, we’ll explain how the 20% bonus tax deduction for small businesses works under the government’s Small Business Skills and Training Boost.

The 2022-2023 Federal budget was announced at the end of March and it included an extra incentive for small business owners to upskill themselves and their teams. Small businesses will be able to claim an additional 20% tax deduction on top of their usual deductions on any relevant training purchases.

How does the new extra 20% tax deduction work?

The aim of the scheme is to encourage small businesses to undertake training and professional development. To achieve this, the government is offering an additional 20 percent bonus deduction for eligible external training courses for business employees. This is on top of the usual tax deduction available for education services already.

Treasurer Josh Frydenberg explains that, “For every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction”. This means that there is a 120% tax deduction for small businesses on offer.

The ATO has stated that the timing of the skills and training boost will work as follows:

  • The Small Business Skills and Training Boost is in effect from the 29 March 2022 until 30 June 2024.
  • Businesses who undertake training before the end of the 2021-2022 financial year will be able to claim 100% of the cost in their 2021-2022 tax return. They will then be able to claim the additional 20% bonus deduction for this period in their 2022–23 tax return.
  • Businesses who undertake training during the 2022-2023 or 2023-2024 financial years will be able to claim the entire 120% in their 2022-2023 or 2023-2024 tax returns respectively.

For example, if a small retail business undertook social media management training in May 2022, they would be able to claim 100% of the cost at the end of the 2021-2022 financial year. Then in the following financial year, they would be able to claim the additional 20%.

If that same retail business then undertook email marketing training in August 2022, they could claim the entire 120% for that purchase in the 2022-2023 tax return.

If you are still unsure about the timing of claiming this incentive then always check with your own tax professional first.

Who is eligible for the Small Business Skills and Training Boost?

The eligibility requirements for the Small Business Skills and Training Boost are that businesses must have an annual turnover of less than $50 million and be registered for GST. As always, if you are unsure if you qualify, seek advice from your own tax professional first.

Small tourism business cafe owners working together on a laptop

What can the Small Business Skills and Training tax deduction be used for?

The ATO has stated that in order for training to be eligible for the bonus tax deduction, it must be “external training courses… delivered by entities registered in Australia”. This means that you will not be able to claim in-house training, and you will also not be able to claim any training delivered by internationally registered providers.

What you CAN claim is any training or coaching, provided in person or online by an Australian trainer.

How you invest in your staff’s education and training all depends on your business goals and identifying the gaps you need to fill to achieve them. If you are hoping to get better at content marketing and business management, you might consider purchasing a 12-month Liferaft Membership. That way you have access to a range of up-to-date, digital marketing and business management courses that you can work through at your own pace, as well as twice-monthly group coaching sessions where you can ask questions of digital experts and receive feedback from your small business peers.

If you have the feeling that your business’s online presence is not effectively attracting new customers, you could purchase a Digital Engagement Health Check and a Consultation package. This would allow an expert assessor to conduct a thorough review of your website, Google listing, Facebook page and Instagram account, providing you with thorough feedback and advice on how to improve. Then, in your one on one consultation, you can work with a digital marketing coach to guide you through prioritising the feedback you received in your Digital Engagement Health Check and creating a plan to make improvements.

Perhaps you have recognised that your business is in need of a whole new digital marketing strategy, but you don’t know where to start. In this case it might be best to invest in a series of one on one coaching sessions with a digital marketing expert who can get to know your business and provide guidance to help you achieve your goals.

Is there anything else I should know?

There are a few important points that businesses should take into consideration regarding the Small Business Skills and Training Boost.

Firstly, the current information available does not make it clear whether there is a maximum amount of training that can be claimed through this program. All current information about the Small Business Skills and Training Boost is outlined on the ATO website.

It’s also important to note that the Small Business Skills and Training Boost has not yet been made law. Due to the recent change in government, there is a possibility that the initiative may be changed or removed from the budget. We will update this blog with more information as announcements are made by the ATO.

As you would with any financial decision you make within your business, it’s important to sit down with your accountant to fully understand the process and implications so that you can make an informed choice.

If you’re interested in learning more about how Tourism Tribe can help to provide you with a boost in digital marketing skills, please reach out to us via our live chat or contact our Business Development Manager Amanda Hinton at amanda@tourismtribe.com.

A version of this article originally appeared on www.navii.com.au

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