Small businesses with an aggregated turnover of less than $50 million will be able to claim a bonus deduction equal to 20% of eligible expenditure incurred on external training provided to their employees.
Unlike the technology boost bonus deduction that was enacted at the same time, the training boost bonus deduction does not have an annual expenditure cap of $100,000.
The bonus deduction is available for eligible expenditure incurred between 7:30pm AEDT on 29 March 2022 and 30 June 2024.
The amount of the bonus deduction is calculated as 20% of the total of the GST exclusive amount of eligible expenditure.
Where the expenditure is eligible for both the Research and Development Tax Incentive and the bonus deduction, the taxpayer may claim both the bonus deduction and the tax offset. The bonus deduction will not affect the amount of the R&D tax offset.
Requirements
The eligible expenditure for the bonus deduction must meet the following criteria:
- expenditure must be for training employees, which does not include training provided to sole traders, partners in a partnership and independent contractors
- The training can be provided either in-person in Australia, or online;
- expenditure must be charged, directly or indirectly, by a registered training provider and be for training within the scope of the provider’s registration (unless the provider is a registered higher education provider within the meaning of the Tertiary Education Quality and Standards Agency Act 2011 in which case there is no scope of registration requirement);
- Training expenditure can include costs incidental to training, provided it is charged by the registered training provider.
- the registered training provider must not be the small business or an associate of the small business;
- expenditure must already be deductible under the taxation law;
- expenditure must be incurred between 7.30pm AEDT on 29 March 2022 and 30 June 2024; and
- expenditure must be for the provision of training, where the enrolment or arrangement for the provision of the training occurs at or after 7.30pm AEDT on 29 March 2022. Where the training is a component of a larger program or course of training, the enrolment or arrangement that must occur at or after this time is the enrolment or arrangement relating to the component for which the relevant expenditure is committed.
Registration requirements for training providers
In order for training to be eligible for the bonus deduction, the training provider must be registered at the time the expenditure is incurred with at least one of the following four government authorities:
- Tertiary Education Quality and Standards Agency (within the meaning of the Tertiary Education Quality and Standards Agency Act 2011);
- Australian Skills Quality Authority (ASQA) (within the meaning of the National Vocational Education and Training Regulator Act 2011);
- Victorian Registration and Qualifications Authority (within the meaning of the Education and Training Reform Act 2006 (Vic)); or
- Training Accreditation Council of Western Australia (within the meaning of the Vocational Education and Training Act 1996 (WA)).
In order for training to be eligible for the bonus deduction, if the training provider is a registered Vocational Education and Training provider under one or more of the below three Acts:
- the National Vocational Education and Training Regulator Act 2011;
- the Education and Training Reform Act 2006 (Vic); or
- the Vocational Education and Training Act 1996 (WA).
The training provided must be within the scope of the registered training provider’s registration for that kind of registered body.
Small businesses can check whether training is within the scope of a registered provider’s registration via the website www.training.gov.au.
A different regulatory framework applies to registered higher education providers within the meaning of the Tertiary Education Quality and Standards Agency Act 2011. Higher education training providers under this Act are not subject to a registration requirement that they deliver training within the scope of their registration. Therefore, the scope of registration requirement is not relevant for higher education training for the purpose of the bonus deduction.
The Tertiary Education Quality and Standards Agency maintains a national register of higher education providers on its website https://www.teqsa.gov.au/national-register
Claiming the bonus deduction
Business will claim the bonus deduction for expenditure incurred in their 2021-22 income year in their 2022-23 return. This is to allow additional time for administrative and legislative arrangements to be put in place before the bonus deduction may be claimed. The bonus deduction for expenditure incurred in an entity’s 2022-23 income year will also be claimed in its 2022-23 return. The bonus deduction for expenditure incurred in an entity’s 2023-24 income year will be claimed in its 2023-24 return.
Accounting for your Eligible Training Costs
When completing your accounts for the 2023 - 2024 income it would be beneficial to separate all training expenses that are eligible for the bonus deduction into a different account than your non-eligible training costs. This will decrease the processing time require to complete your end of year accounts and income tax returns. Which is beneficial to both you and you accountant.
We're here to help
Please reach out to our Ulton Tax Advisory Team if you wish to discuss.
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