I have said for years that our country requires tax reform. The country’s politicians seem to agree but none of them have the guts to do it.
So, they tinker on the edges. And because none of them live in the real world most of what they come up with is bonkers. Nuts. And inevitably stupid.
Most tax law makes sense. But latest ones? They are mostly ill conceived, draconian, bonkers, bitter, nuts, dangerous, counterproductive, and mostly made primarily to make life a bit more difficult for you and me. Especially me.
In the 2022 budget (yes that was last year so please keep up) they came up with a whopper stupid, nuts and insane policy. And boy does it make my life difficult. Well, maybe not me but my team is not happy. Only someone who does not live in the real world would have thought up of these rules.
But ignore these opportunities and you could lose out on thousands of dollars of deductions. And when I mean thousands, I literally mean thousands.
So here goes.
Our government decided there should be a:
- A Skills and Training Boost
- A Technology Investment Boost
- And that this would be for expenses from 29 March 2022 to 30 June 2024 for the skills boost and for the period 29 March 2022 to 30 June 2023 for the technology boost
If you spend any money on this, you get an additional 20%. Eg you spend $10,000 on training your team. In the tax return you can claim $12,000 as a tax deduction.
Sounds fantastic. And wonderful.
Err….. not quite. The scheme is good. It’s just how it operates. Here’s why.
- Businesses are allowed to claim from 29 March 2022 but the legislation was not passed until 29 November 2022 and not finalised until now. That means you (and we) didn’t know exactly what could be claimed so could not plan for it.
- If you want to claim someone must go through all expenses and identify what they are from 29 March 2022 to 30 June 2023. Then you need to tell your accountant so that they can bury themselves in a spreadsheet and then claim it for you in the tax return. Yep, you must go back to 29 March 2022.
- You will have to do the same thing for the year to 30 June 2024.
- The way you claim the expenses and the 20% Boost is stupid and that is why I say those that dreamt this up are bonkers and do not live in the real world.
Want an example? Well let’s say on 18 May 2022 you spent $10,000 training your team. In the tax year to 30 June 2022, you can claim 100% of this. The additional 20% or $2,000? Well, you must claim that in the tax year 30 June 2023.
See what I mean?
So, what in theory sounds like a great scheme, in practice can become a nightmare.
Now many of you may think this is too hard to deal with. But let me give you a tip. Scream at your government but do the hard work because every business I can think of will be able to claim and the amounts will not be small. What you can claim on is wide so do it or make the decision you are happy to pay more taxes.
As you would expect from anything that comes from government, there are a lot of terms and conditions or rules on claims which I do not want to bore you to death with.
Here is what you can claim:
- External paid training given by a recognised training organisation (basically any Australian training business)
- Computer hardware and equipment (incl. laptops and tablets
- Telecommunications hardware and equipment (incl. mobile phone, smart watches)
- Software (including subscriptions)
- Internet costs
- IT support charges
- Digital media and marketing (incl. website costs, SEO)
- E-commerce fees including subscriptions)
- Cyber security costs
As you can see there is a lot that can be claimed here. You can claim a maximum boost of $20,000 per year (which means you can go mad and spend $100,000 but get $120,000 tax deduction from the tax office) for the Technology Investment Boost.
It gets better because there is no limit for the Skills and Training Boost although you ability to claim is a bit narrow.
But remember. Never spend to get a tax deduction. You will always be out of pocket. Spend the money because you need to not to get a deduction.
If you are a client of either WOW! Advisors & Medisuccess, we will be in touch with you to discuss how we are going to claim expenses for you and what you need to do to ensure you can make the correct claims. If we do not act for you, have a chat with your accountant!