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The small business skills and training boost application will end on June 30th~
Small businesses can claim a 20% bonus deduction on certain eligible training expenditure for new and existing employees. Small businesses with an aggregated annual turnover of less than $50 million can benefit from it. The flexibility of this is also one of its advantages. Businesses can apply for deductions for external training courses provided to employees, whether online or offline. This also provides businesses with a wide range of training options to meet the needs of different employees.
Application Conditions
The annual turnover of the enterprise does not exceed $50 million, and the expenses generated by the training must meet the following conditions:
for the provision of training to employees of your business, either in-person in Australia, or online
charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours
already deductible for your 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.
Additionally, it is necessary to ensure that the training provider meets specific registration standards. Registered providers can be checked on the following websites:
The following expenses cannot be considered as deductible:
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.
Example to calculate the value
The following example will help you calculate the value of the boost as a bonus deduction or reimbursement.
Example: Calculating the Additional Deduction Amount for External Training
AAA is a small business entity. The company pays $3,500 (excluding GST) for external training for employees. The $3,500 can be fully deducted as a business operating expense under current tax laws. Assuming other relevant requirements are met, the additional deduction amount is 20% of $3,500, which is $700.
AAA also pays $4,400 (including GST) for a training course for two employees. Since AAA is registered for GST, it receives a $400 GST offset in its BAS. The expenditure for small business skills and training is the payment amount minus the GST offset amount ($4,400 - $400 = $4,000). The additional deduction amount is calculated as 20% of $4,000, which is $800.
Normal, late or early balancers
The entity's income year is usually the 12–month period ending on 30 June, refer to these entities as 'normal balancers’, for example: the income year from 1 July 2022 to 30 June 2023.
However, there are exceptions, and businesses will be allowed to adopt a substituted accounting period (SAP):
where the last day of its income year falls between 1 July and 30 November, the SAP is in lieu of the income year ending on the preceding 30 June – this is a late balancer
where the last day of its income year falls between 1 December and 31 May the period adopted is in lieu of the income year ending on the succeeding 30 June – this is an early balancer
Normal balancers
For eligible expenses incurred during the period from 7:30 pm AEDT 29 March 2022 and 30 June 2022, you can:
claim the 100% deduction for this period in your 2021–22 tax return
claim the 20% bonus incurred in this period in your 2022–23 tax return
For eligible expenditure incurred between 1 July 2022 and 30 June 2023 (2022–23 income year) you claim both the 100% deduction for the expenditure and the 20% bonus deduction in your 2022–23 tax return. And so on.
Example:
AAA Pty Ltd is a small business entity operating from July 1 to June 30 of the following year.
On 4 May 2022, AAA paid $1,000 (excluding GST) for training for an employee. $1,000 can be fully deducted as a business operating expense, with an additional deduction of $200.
On 4 May 2023, AAA paid $3,000 (excluding GST) for the same training for three new employees. The entire $3,000 can be fully deducted as a business operating expense. If AAA meets other relevant requirements, the additional deduction amount will be 20% of $3,000, which is $600. Additionally, the $3,000 training expense plus the $600 additional deduction should both be reflected in the 22-23 tax return.
Therefore, AAA will apply for:
$1,000 in its 2021–22 tax return
$3,800 in its 2021–22 tax return (general deduction of $3,000 on 4 May 2022, additional deduction of $200 on 4 May 2022, and additional deduction of $600 on 4 May 2023).
Late balancers
For late balancers who incur expenditure between 7:30 pm AEDT 29 March 2022 and the end of your 2021–22 income year, you:
claim the 100% deduction for this period in your 2021–22 tax return
claim the bonus 20% incurred in this period in your 2022–23 tax return
For eligible expenditure incurred in your 2022–23 income year, you claim both the 100% deduction for the expenditure and the 20% bonus deduction in your 2022–23 tax return. And so on.
Example:
AAA operates from 1 August to 31 July of the following year.
On 4 May 2022, AAA paid $1,000 (excluding GST) for training for an employee. $1,000 can be fully deducted, with an additional deduction of $200.
On 4 May 2023, AAA paid $300 (excluding GST) for the same training for three new employees. $300 can be fully deducted, with an additional deduction of $60.
On 4 May 2024, AAA paid $600 (excluding GST) for the same training for three new employees. $600 can be fully deducted, with an additional deduction of $120.
Therefore, AAA will apply for the following amounts:
$1,000 in its 2021–22 tax return
$560 in its 2022–23 tax return (general deduction of $300 on 4 May 2023, additional deduction of $200 on 4 May 2022, and additional deduction of $60 on 4 May 2023).
$720 in its 2023–24 tax return (general deduction of $600 on 4 May 2024, and additional deduction of $120 on 4 May 2024).
Early balancers
For early balancers who incurred eligible expenditure between 7:30 pm AEDT 29 March 2022 and the end of your 2021–22 income year, you:
claim the 100% deduction for this period in your 2021–22 tax return
claim the 20% bonus incurred in this period in your 2023–24 tax return.
For eligible expenditure incurred in your:
2022–23 income year, you deduct the 100% deduction in your 2022–23 tax return and the 20% bonus deduction in your 2023–24 tax return
2023–24 income year, you deduct both the 100% deduction and the 20% bonus deduction in your 2023–24 tax return
2024–25 income year (up until 30 June 2024), you deduct both the 100% deduction and the 20% bonus deduction in your 2024–25 tax return.
Example:
AAA's income year runs from 1 January to 31 December of the same calendar year (early balance). Its 22-23 financial year starts on 1 January 2022.
On 28 July 2022, AAA paid $14,000 (excluding GST) for training for two employees. $14,000 can be fully deducted, with an additional deduction of $2,800.
On 10 April 2023, AAA paid $21,000 (excluding GST) for training for new employees. $21,000 can be fully deducted, with an additional deduction of $4,200.
On 8 April 2024, AAA paid $6,000 (excluding GST) for training for new employees. $6,000 can be fully deducted, with an additional deduction of $1,200.
This means AAA will apply for the following amounts:
$14,000 in its 2022–23 tax return
$28,000 in its 2023–24 tax return (general deduction of $21,000 on 10 April 2023, additional deduction of $2,800 on 28 July 2022, and additional deduction of $4,200 on 10 April 2023).
$7,200 in its 2024–25 tax return (general deduction and additional deduction on 8 April 2023).