The federal government has unveiled draft legislation that will give small and medium-size enterprises (SMEs) access to more than $1.5 billion in tax concessions to encourage digital technology adoption and boost training.
Treasurer Jim Chalmers released both bills for public consultation on Monday, having pledged to support the tax incentives first proposed by the former Coalition government in the March federal Budget.
“The Albanese Labor Government is making these tax incentives law because we recognise that better trained workers and more productive small businesses are a win-win for the economy,” he said with Small Business minister Julie Colins and Assistant Treasurer Stephen Jones.
The Technology Investment Boost will allow 3.7 million small businesses with an annual turnover of less than $50 million to access a bonus 20 per cent deduction for investments in new technologies before 30 June 2023.
Under the scheme, small business will be able to receive a $120 tax deduction for every $100 spent on “digital enabling items” such as hardware, software, services that “form and facilitate the use of a computer”, as well as digital media and marketing and e-commerce.
The incentive – which has the backing on the Technology Council of Australia, which gave the measure prime billing in its budget response – will apply to the “total of eligible expenditure of up to $100,000 per income year” and be capped at a maximum bonus deduction of $20,000 per year.
It is expected to reduce tax receipts by $1 billion over the next four years, though budget documents released in March show this will not be felt by the Australian Taxation Office until the 2023-24 financial year.
The Skills and Training Boost, meanwhile, will allow small businesses to access a bonus 20 per cent deduction for eligible expenditure on external training of employees by registered training providers in Australia.
At a cost of $550 million to Treasury, the deduction aims to help small businesses “address skills shortages by upskilling existing staff or training new staff”, as the government looks for longer-term solutions through the Jobs and Skills Summit this week.
Mr Chalmers said the government would seek to introduce legislation for both tax incentives before the end of this year, with the deductions to be backdated to 29 March 2022 “so small business can receive the full benefits”.
The Technology Investment Boost will run until 30 June 2023, while the Skills and Training Boost will continue until 30 June 2024, giving small businesses another year to access the incentive in a changing market.
“The government recognises that training employees is expensive and takes time, both of which are at a premium when employers are trying to run a small business,” Mr Chalmers said of a sector that employs around 8 million workers.
“These measures will make it easier for small businesses and help them recoup some of the costs of the investments they make in their employees and digital operations.”
The consultation will run until 19 September 2022, with legislation expected to be introduced into Parliament before the end of the year.
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