Use Appendix 16 to help you work out if and when you can claim the small business boosts.
Small business skills and training boost
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 provided for a temporary skills and training boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) are able to claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for expenditure incurred for the provision of eligible external training courses to employees by eligible registered training providers in Australia.
It applies to eligible expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2024. Special rules provide for the income year in which the bonus deduction can be claimed.
How to complete the partnership tax return
You make the boost claim as an expense subtraction at Reconciliation items, item 5 Expense reconciliation adjustments (using Worksheet 1).
You also record the amount at item 52 Small business boosts.
Do not include at those labels the ordinary deduction for expenditure on your skills and training.
The bonus deduction is an additional tax deduction of 20%, on top of the ordinary deduction, for the cost of eligible training expenditure incurred between 7:30 pm AEDT on 29 March 2022 and 30 June 2024.
It applies to enrolments or arrangements for the provision of training made or entered into at or after 7:30 pm AEDT on 29 March 2022.
Criteria for claiming the bonus deduction
You must also meet the following criteria for the bonus deduction:
- expenditure must be for training employees, 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
- the eligible registered training provider must not be the small business or an associate of the small business, for example, a related entity or individual or a relative, spouse, or partner of a related individual
- expenditure must already be deductible under the taxation law.
Expenditure for training persons other than employees is not eligible for the bonus deduction. For example, contractors and partner of a partnership are not eligible for the bonus deduction.
When to claim the bonus deduction
The ordinary deduction is claimable in the income year in which the expense is incurred. However, special rules apply in claiming the bonus deduction. When you claim also depends on the balancing date if the small business has a substituted accounting period.
If you incurred expenditure between 7:30 pm AEDT on 29 March 2022 and the end of your 2022–23 income year, you claim the bonus deduction in respect of this expenditure in 2022–23. This means that you claim the bonus deduction for eligible expenditure incurred in both 2021–22 and 2022–23 in your tax return 2023.
If you incur expenditure for 2023–24 income year (up until 30 June 2024), you claim the bonus deduction in respect of this expenditure in the 2023–24 income year.
If you are an early balancer and:
- you incurred expenditure between 7:30 pm AEDT on 29 March 2022 and the end of your 2022–23 income year, you claim the bonus deduction for this expenditure in 2023–24
- you incur expenditure in your 2023–24 income year, you claim the bonus deduction for this expenditure in 2023–24.
- you incur expenditure in 2024–25 (up until 30 June 2024), you claim the bonus deduction for this expenditure in 2024–25.
The ordinary deduction for eligible skills and training expenditure is claimable under the usual rules in the income year in which the expenditure is incurred.
Step 1 Show your bonus deduction for the small business skills and training boost in respect of your primary production business at row X in worksheet 1 in the primary production column.
Step 2 Show your bonus deduction for the small business skills and training boost in respect of your non-primary production business at row X in worksheet 1 in the non-primary production column.
Step 3 Add up your primary production and non-primary production at row X in worksheet 1.
Step 4 Transfer the amounts at row X in worksheet 1 to item 5 – expense reconciliation adjustments (expense subtractions). Also record this amount at item 52 – label A. Do not show cents.
Small business technology investment boost
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 (Act No. 29 of 2023) provided for a temporary technology investment boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) are able to claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for eligible expenditure incurred and depreciating assets acquired, for the purposes of their digital operations or digitising their operations. The maximum additional deduction is $20,000 per income year.
It applies to eligible expenditure of up to $100,000 per income year incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023. Special rules also apply if claiming the bonus deduction for eligible expenditure on a depreciating asset.
You make the boost claim as an expense subtraction at item 5 Reconciliation items, Expense reconciliation adjustments (using worksheet 1).
You also record the amount at item 52 Small business boosts.
Do not include at these labels the ordinary deduction for expenditure on your technology investment.
Criteria for claiming the bonus deduction
You must also meet the following expenditure criteria for the bonus deduction:
- the expenditure must have been eligible for a deduction under another provision of the taxation law
- if the expenditure was on a depreciating asset, the asset must have been first used or installed ready for use by 30 June 2023
- the expenditure must have been incurred wholly or substantially for the purposes of your digital operations or digitising your operations.
If the expenditure was for multiple purposes (for example, a mix of private and business use), the bonus deduction applies only to the proportion of the expenditure that was for business use.
You cannot claim the bonus deduction for expenditure on a depreciating asset if any balancing adjustment event occurred to the asset (for example, it was sold) during the income year in which you held the asset and incurred the relevant expenditure, unless the balancing adjustment event was an involuntary disposal.
Repair and improvement costs for depreciating assets are eligible for the boost provided that these costs were incurred during the relevant period.
The following types of expenditure are not eligible for the bonus deduction:
- salary and wage costs
- capital works costs which can be deducted under Division 43 of the ITAA 1997
- financing costs
- expenditure that forms part of, or is included in, the cost of trading stock
- training and education costs.
If you are claiming the bonus deduction for eligible expenditure incurred on a depreciating asset that is used, or installed ready for use, for a taxable purpose before 1 July 2023, you calculate the bonus as 20% of the asset's cost irrespective of whether you claimed your ordinary deduction for the decline in value of the asset using temporary full expensing or the uniform capital allowance regime in the relevant income year. If you are a small business that uses the simplified depreciation rules, you must use temporary full expensing when claiming your ordinary deduction.
Working out and claiming the bonus deduction
The bonus deduction is available where your expenditure was incurred from 7:30 pm AEDT on 29 March 2022 to 30 June 2023.
If you are a normal or late balancer
- If you incurred expenditure from 7:30 pm AEDT on 29 March 2022 and to the end of 2022–23, you claim the bonus deduction in your 2022-23 income tax return.
- This means that you claim the bonus deduction for eligible expenditure incurred in both the 2021–22 income year and the 2022–23 income year in your 2022–23 tax return.
If you are an early balancer:
- lodging for 2022–23 income year, do not claim the bonus deduction
- lodging for 2023–24 income year, and
- incurred expenditure from 7:30 pm AEDT on 29 March 2022 to the end of your 2022–23 income year, you claim the bonus deduction for that expenditure in 2023–24
- incur expenditure in your 2023–24 income year (up until 30 June 2023), you claim the bonus deduction for that expenditure in 2023–24.
Whether you are a normal, late or early balancer, you can claim up to a maximum bonus deduction of $20,000 for each time period meaning up to a maximum of $40,000 for the period from 7:30 pm AEDT on 29 March 2022 to 30 June 2023.
The ordinary deduction for eligible technology investment expenditure is claimable (under the usual rules) in the income year in which it is incurred, and for depreciating assets, when the asset is first used or installed ready for use.
Step 1 Show your bonus deduction for the small business technology investment boost in respect of your primary production business at row Y in worksheet 1 in the primary production column.
Step 2 Show your bonus deduction for the small business technology investment boost in respect of your non-primary production business at row Y in worksheet 1 in the non-primary production column.
Step 3 Add up your primary production and non-primary production at row Y in worksheet 1.
Step 4 Transfer the amounts at row Y in worksheet 1 to item 5 – expense reconciliation adjustments (expense subtractions). Also record this amount at item 52 – label B. Do not show cents.
Return to: Appendixes
Use these instructions to help you complete the Partnership tax return 2023. (NAT 0659)