The new tax benefits your business needs to know about

As a new tax year starts, various changes to the tax system have kicked in – chief among them being a number of new concessions which are only available to small businesses. Here’s my guide to the new tax concessions that your small business really should be taking advantage of, writes Mark Chapman, Director of Tax Communications, H&R Block.

Instant asset write-off

Sure, its not as good as the late, lamented Temporary Full Expensing scheme but it’s all we’ve got, so it would be foolish to quibble.

From 1 July 2023 through until 30 June 2024, small businesses can claim the instant asset write-off, which gives an immediate tax deduction for capital assets costing less than $20,000. The scheme is available for any businesses with an aggregate turnover of less than $10 million.

Amongst the items you could look at claiming are the following:

• Cash registers and other POS devices
• Delivery vans, utes, motorcycles
• Cars (probably second-hand, given the $20,000 limit!)
• Store or office fittings and fixtures
• Computers, laptops and tablets
• Security systems
• Accounting software
• Plant and equipment, including tools

The $20,000 threshold applies on a per-asset basis, so small businesses can instantly write off multiple assets.

If the cost of the asset is more than $20,000, it must be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year after that.

Tax Boost for small businesses to invest in energy-saving technology

The Small Business Energy Incentive is designed to help small and medium-sized businesses invest in their energy transformation by giving a 20 per cent tax deduction bonus for all eligible purchases.

This will provide businesses with an annual turnover of less than $50 million (note that the turnover threshold is higher than the instant asset write-off one) with an additional 20 per cent deduction on spending that supports electrification and more efficient use of energy.

Businesses can claim the bonus deduction on expenditures such as electrifying their heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.

Tradies, manufacturers, restaurants, hairdressers and real estate agents are amongst the small businesses that will benefit from the move.

However, certain exclusions will apply, such as:

• electric vehicles
• renewable electricity generation assets
• capital works
• assets that are not connected to the electricity grid and use fossil fuels

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.

You generally claim the 20 per cent bonus deduction in the year the expenses are incurred, regardless of whether the expenditure is on items to be depreciated.

Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Tax boost for expenditure on skills and training

A similar tax boost will also be available for certain eligible training expenditures for your employees.

Small businesses with an aggregated annual turnover of less than $50 million will be entitled to an additional 20 per cent tax deduction for external training courses delivered to employees by registered training providers. Unlike the energy-saving boost (above), there is no maximum amount that can be spent to qualify for the bonus deduction.

The boost applies to eligible expenditures incurred until 30 June 2024.

The bonus deduction is available for expenditure for the provision of training to one or more employees of your business. The training provider must meet certain registration criteria for the bonus deduction. You can check for registered providers at training.gov.au – Home page.

Training expenses can include incidental costs related to the provision of training, provided they are charged by the registered training provider, such as the cost of books or equipment needed for the course.

You can’t claim expenditure for:

• 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.

You generally claim the bonus 20 per cent deduction for expenditure incurred in the year ended 30 June 2024 through your tax return, at the same time as you claim a deduction for the other 100 per cent.

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