We, accountants, love budget time. There are often new rules which excite us and we get to display graphs and diagrams and tell people they are better off by $7 a week (how do they work that out and who cares about $7 a week anyway)!
But often there is the odd spanner in the works which means work is required to ensure you get the best outcome.
We love the New Skills and Technology Boost. With some planning, these generous boosts could seriously reduce tax bills.
How does it work? Well, let’s say you pay $10,000 for employee training and $3,000 for digital subscriptions.
Normally you would be able to claim a tax deduction of $13,000. Well from now until 30 June 2024 the claim will be $15,600 (an extra 20%) not $13,000 or $2,600 more.
But there is a catch. Two catches actually. And already members of my team are pulling their hair out trying to work out how this is going to work.
The first catch? Well, the Government is being a bit tight in the first year. Think of it as someone who needs to prepay back a loan you have given them. Rather than pay this year they are dragging it out and will pay next year.
Annoying and frustrating and it means you need to remember it has not been paid and then remember to collect it.
Confused? Yeah, we are too.
Basically, if you spend money between now and 30 June 2022 on training or digital matters you cannot claim this extra $2,600 in the year to 30 June 2022. You must remember and claim it in your 30 June 2023 tax return. Stupid?
Yeah, we think so.
It means we accountants need a good memory to ensure we claim it.
The second catch is one which can either make you money or leak it away from you. It’s because generally, training costs are one item in your accounting system. Computer costs are too. But to make a claim you need to have good records.
Let’s take two examples about training.
Eg 1 You live in Brisbane but take an order for a course in Perth which requires accommodation and flights. You can claim the extra 20% on the course but not on the flights or accommodation.
Eg 2 You have decided to go to a course organised online by a UK company. In this case you cannot claim the extra 20% because the course is not organised by an Australian company.
As you can see when it comes to claiming the additional amount records need to be maintained and if everything is in one account, that is going to be difficult, especially for our team. We won’t know one from the other.
After hours of deliberations, talks and negotiations (which would make ScoMo proud) my team has come up with a plan. We have decided that your chart of accounts should have an extra two lines within the P&L account which will identify and post expenditure where the boost applies.
If we do your bookkeeping, we will do this automatically and claim the extra deductions. If you do your own bookkeeping you will need to set up these two accounts or call our office for assistance. But remember if you do not do it, you could potentially lose out on $$$$!
