Go Digital: What the Federal Budget Means for Australian Small Businesses
The Aus government has a digital future in its sights. How do we know? The release of the Federal Budget on March 29th 2022 was hyper-focused on digital spending, with a highlight being up to $1 billion in tax breaks for Australian small businesses.
The push behind it is to make it easier for business owners to run and grow their businesses. Streamlined processes and profit increases are the name of the game here, so let’s see just how the new bonus tax deduction is set to support businesses to move further online.
The 2022 Federal Budget: What’s in it for you?
To give Australian small business owners a helping hand, it was announced in the 2022 Federal Budget that eligible businesses will be able to deduct $120 for every $100 they spend on digitisation. This could encompass anything from upgrading your cybersecurity to migrating to cloud services and improving your website - and businesses that turn over less than $50 million may be eligible.
This move allows for spending up to $100,000 per year, and the tax break is up for grabs on purchases made between now and June 30th next year, as announced by the Prime Minister.
On top of this incentive, there’ll be a $550 million skills and training boost, to encourage small businesses to invest in the digital skills of their employees. For example, by adopting new digital technologies and getting the workforce up to speed with them.
2022-2023 will also see the ATO work with accounting software developers, to find ways to improve cash flow for businesses - making running things a little easier. According to the official website, the focus is on technology that can:
- Automate reports
- Reduce costs and improve processing times
- Align payment obligations with real-time financial performance reports
- Improve cash flow
How ScoMo is expecting businesses to digitise
The government has described small businesses as “the engine room of our economy”. Businesses can deduct the additional 20% of costs incurred, as long as those expenses go towards digitisation.
So, amongst other things, that might include:
- Investing in new laptops or other hardware
- Improving cybersecurity
- Getting a new website or making improvements to your current site
- Incorporating new software
- Investing in digital skills/training
- Moving to e-invoices
What’s more - the Aus Gov is planning to improve its own services, such as the ABRS and MyGov, to find better ways to meet the needs of a stronger digital economy.
How can you claim the benefits?
The Aussie businesses undergoing a digital transition are being rewarded - and rightly so! The tax break applies to the vast majority of businesses, since around 97-98% of businesses down under are classed as small businesses.
So, any purchases you make in support of digitisation this tax year count. You’ll be able to claim the bonus deduction on up to $100,000 of expenses annually.
We recommend having a chat with your accountant about the ins and outs of the purchases that are eligible. With the incentives backing you up, there’s never been a better time to create a digital transformation plan for your business.
Not sure where to start? Get in touch with our team. From managed IT services to cybersecurity and software upgrades, The IT Department is the ideal partner for your business right now.