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The revived 120 per cent deduction for technology and training investment is vital, say leaders.
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Small businesses applaud digital and skills incentives
31 August 2022
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Small-business organisations have warmly welcomed the revival of a 120 per cent tax deduction for skills training and digital uptake as a timely incentive for their members that will help them become more competitive and resilient.
The move to legislate the measures, which were initiatives in the last budget, will enable businesses with an annual turnover under $50 million to claim for spending on technology or training backdated to March.
Digital systems were essential and proved their worth to small businesses during COVID, the Council of Small Business Organisations Australia said.
“We know from research by payroll provider Xero that the more digitised a small business was, the more resilient they were to the shocks of COVID-19,” said chief executive Alexi Boyd.
“It’s almost impossible to run a small business today without using technology, whether that be digital data storage, marketing to customers, payment services for customers, managing inventory, payroll software, or just having a website and social media channels.
“It is essential to incentivise digitisation to make our small businesses stronger, more productive, and more resilient to future economic shocks.”
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She praised the bipartisan support for the sector but said the digital incentive should be complemented by more resources devoted to combating cyber crime.
“With increased uptake of technology comes a greater vulnerability to cyber security threats. COSBOA encourages the government to adopt a program to empower small business owners and their staff with the skills they need to protect themselves from cybercrime,” Ms Boyd said.
The Australian Small Business and Family Enterprise Ombudsman Bruce Billson agreed that digital systems had been vital during the pandemic and said the tax breaks were welcome support for growth.
“Small business is a dynamic and fast-growing sector that allows people with an entrepreneurial spirit to pursue their dreams and incentives like this will help increase the $438 billion contribution small business makes to the economy,” he said.
“Delivering these budget promises will provide incentives for small and family businesses to deepen their commitment to their communities and the economy.
“The digital tax break will allow them to invest in items such as cyber security systems, cloud-based services, accounting or e-invoicing software, hardware such as laptops and portable payment devices.
“For a small business, the cost of training staff can be quite significant, and this deduction will support owners to make an investment in upskilling staff to drive productivity and competitiveness.”
The draft legislation, which is open for consultation until 19 September, was also given a thumbs up by professional accounting bodies.
On the eve of the Jobs and Skill Summit, CA ANZ said the move was “a big win” for those already struggling to retain talent.
“I thank the federal government for moving swiftly to legislate these proposals as it is something, as a profession, we have been advocating for,” said CA ANZ CEO Ainslie van Onselen.
“Small businesses are grappling with the capacity to retain their staff, and this move will give them certainty to invest in their people, and to give their staff some clear pathways in their professional development.
“This type of investment may be the difference between a staff member staying with a business or deciding to pursue another opportunity.”
CPA Australia CEO Andrew Hunter said the government should move quickly to legislate the measures, which it had been pressing for since the election as vital to help SMEs “improve their performance”.
The general manager of technical policy at the IPA, Tony Greco, said the measures were great for Australia’s lagging productivity but one drawback was their duration, with the training deduction finishing on 30 June 2024 and the digital deduction running only until 30 June 2023.
“Our biggest issue is that these initiatives have a short life cycle and are temporary in nature so that is disappointing once they end,” Mr Greco said.
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