Fantastic news coming out of the most recent 2022-23 budget announcements.
The Australian government is offering up to $1 billion in tax cuts to small businesses that invest in digital spendings, such as upgrades to cybersecurity systems or ecommerce platforms.
Under the new rules, more than 3.6 million small businesses with less than $50 million in yearly earnings will be eligible for a $120 per $100 deduction on services that help them develop their digital capabilities. Retail and online business owners would be able to claim an extra 20 per cent deduction on costs of business expenses and depreciating assets used to support "digital adoption."
Treasurer Josh Frydenberg said the bonus deduction was aimed at cutting the cost of going digital and backing businesses that were "embracing the digital revolution".
Business owners would be able to claim the tax break on purchases made between the 29th of March, 2022 and the 30th of June, 2023.
"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 past Tuesday, the 29th of March 2022.
Tax deductions may include spending on:
- New websites and upgrades (Shopify and other ecommerce platforms)
- Subscriptions to cloud computing
- Portable payment devices
- E-invoicing (services such as XERO or MYOB)
Crucially, legislation is required for these tax incentives to come into effect, “These measures are not yet law,” the ATO said. We'll keep you in the loop when updates come out.
These tax incentives are part of the Digital Economy Strategy, which aims that by 2030, 95% of SMEs will be using ecommerce tools.