Royal assent has now been given to the legislation relating to the Small Business Skills and Training Boost. This means that small businesses with an aggregated annual turnover of less than $50 million can now claim a 20% bonus deduction on eligible training expenditures for their employees.

The boost applies to eligible expenditure incurred between 7:30 pm AEDT on 29th March 2022 and 30th June 2024.

Eligibility for the Boost

To be eligible for the additional 20% deduction, the expenditure must be:

1. For the provision of training employees of your business. This can be either in-person or online.

2. Charged, either directly or indirectly, by a registered external training provider that is not you or one of your associates.

3. Already deductible to your business under taxation law; and

4. Incurred within the time period specified above.

Where the training is a component of a larger training course or program, the enrolment or arrangement relating to the expenditure for the course must have been entered into after 7:30 pm AEDT on 29th March 2022.

What Expenses Can You Claim

The expenditure must be in relation to the costs of the training to your employees by a registered training provider. In addition to the training course cost, items such as books and equipment required to complete the course can also be eligible expenditure for the Boost.

If the expenses include GST and the business is GST registered, then the Boost amount is calculated on the GST-exclusive amount of the expenses.

For capital expenses and other items claimed over time, the Boost is calculated as 20% of the total amount of the eligible expenditure and claimed upfront in the first year that the expense becomes deductible.

What Expenses Can’t You Claim

You cannot claim the 20% bonus deduction for the following expenditure:

1. Training on non-employee business owners such as sole traders, partners in a partnership or independent contractors

2. Costs added by an intermediary on top of the cost of training. This includes items such as commissions or fees charged by a third party as they are not charged by the registered training provider.

Registered Training providers can be found at the following websites:

Training.gov.au

TEQSA - National Register

Calculating the Boost – Case Study Example

Cockablue Pets Pty Ltd is a small business entity that operates a veterinary centre. The business takes on a new employee to assist with jobs across the centre. The employee has some prior experience in animal studies and is keen to upskill to become a veterinary nurse.

The business pays $3,500 (GST exclusive) for the employee to undertake external training. The bonus deduction is calculated as 20% of 100% of the amount of expenditure that can be deducted under another provision of the taxation law.

In this case, the full $3,500 is deductible as a business operating expense. Assuming the other eligibility criteria for the bonus deduction are satisfied, the bonus deduction is calculated as 20% of $3,500. That is, $700.

The business also pays $4,400 (GST inclusive) for 2 of its employees to attend an external training session. Cockablue Pets is registered for GST and entitled to claim $400 as a GST credit in their BAS.

The eligible expenditure for the small business skills and training boost is the amount of expenditure less the GST amount claimed as an input tax credit ($4,000). The bonus deduction is calculated as 20% of $4,000, which is $800.

If you have any questions about this or wish to discuss it further, please contact us on 0434 084 635 or email amy@albaccounting.com.au.