Small Business Skills and Training Boost

Small businesses will be allowed an additional 20% tax deduction for external training courses delivered to employees by registered training providers:

• If the business is registered for GST and the training is not GST-free, the bonus deduction is calculated on the GST exclusive amount plus any GST the applicant cannot claim as a GST credit in carrying on the business.
• Where deductions are to be claimed over time such as for capital deductions, the bonus deduction is calculated as 20% of the full amount of the eligible expenditure. No requirement to provide donor workout copy. It can be claimed upfront in the first income year in which the bonus deduction is available.

There may be fringe benefits tax (FBT) consequences associated with the expenditure incurred. For more details, refer to Fringe benefits tax – a guide for employers.

If the business is entitled to an R&D notional deduction under the Research and Development (R&D) Tax Incentive program, they are only entitled to the notional R&D deduction and not a deduction under other taxation law. The bonus deduction is still claimed based on what that other deduction would have been.

Businesses can claim both the bonus deduction and the R&D notional deduction. The bonus deduction will not affect the amount of the R&D notional deduction. The R&D notional deduction amount is the actual expenditure amount, not the expenditure amount and the bonus deduction amount.

Businesses generally claim a deduction in the year the expenses are incurred. Under the delayed claim rule, they may have to claim a deduction for the eligible expense in their tax return for the income year in which they incurred it and claim the 20% bonus amount in a later year’s tax return. This generally depends on:

• When the income year runs, so whether the business is an early, normal or late balancer.
• At what time during the income year the business incur the expense.

Eligible Activities

Eligible training expenses include incidental costs related to the provision of training, provided they are charged by the registered training provider, such as the cost of books or equipment needed for the course.

Eligible expenditure must be:

• For the provision of training to employees of the business, either in-person in Australia, or online.
• Charged, directly or indirectly, by a registered external training provider that is not the applicant or an associate of the applicant.
• Already deductible for the business under taxation law.
• Incurred within a specified period (between 7:30 pm AEDT or by legal time in the ACT on 29 March 2022 and 30 June 2024).

Where the training is a component of a larger program or course of training, the enrolment or arrangement relating to the relevant expenditure must be made or entered into at or after 7:30 pm (by legal time in the ACT) on 29 March 2022.

Who Can Apply?

Eligible applicants include small business entities with standard aggregated annual turnover rules with an increased $50 million threshold.

A taxable not-for profit organisation can claim the boost in their company tax return if they meet both requirements:

• Eligibility (small business with an aggregated annual turnover of less than $50 million).
• Eligible expenditure.

Restrictions

The following are ineligible for funding:

• Training of non-employee business owners such as sole traders, partners in a partnership or independent contractors.
• Costs added on an invoice by an intermediary on top of the cost of training, such as commissions or fees, as they are not charged directly or indirectly by the registered training provider.