The 2022/23 Federal Budget brings a lot of promise for the digital economy and the workforce. At the end of March 2022, the Government announced tax deductions for small businesses that invest in technology and skills training.

Australian government galvanises digital transformation and skills training with small business tax deductions - Parliament

Small business wish list

Treasurer Josh Frydenberg noted that small businesses are at the heart of the economy, employing 8 million Australians. The tax breaks aim to help businesses increase productivity, competitiveness and self-reliance.

Australian government galvanises digital transformation and skills training with small business tax deductions - Small Business Wishlist

The ABC asked small business owners about what they hope from the federal budget. Topping the list is the need for scientists, technologists and engineers, specifically women in ICT and STEM and programs to encourage students to take up these fields. Addressing this will help solve other problems like reducing the prices of produce, reducing carbon emissions for transport and being able to manufacture locally.

The Digital Economy strategy itemised

You can get insights into the Federal Government's plans for digital transformation based on the list below.

Building the foundations to grow the digital economy

  • Over $100 million to support digital skills for Australians

  • $113.1 million to accelerate the expansion of the Consumer Data Right to new data and sectors, and a further $38.4 million to enhance CDR functionality

Building capability in emerging technologies

  • $124.1 million to enhance Australia’s Artificial Intelligence (AI) capability

  • $111 million to drive the growth of Australia’s quantum industry

  • $18.6 million to protect Australia’s national interest in critical and emerging technologies

Digital Growth Priorities

  • $38.4 million to expand the Australian digital games industry through the Digital Games Tax Offset

  • $15.3 million towards enhancing the value of e-invoicing

More details on tax deductions for small business

Upskilling and training

Under the new Skills and Training program, if your business has a turnover of less than $50 million, your business is eligible to access an additional 20 per cent deduction for the cost of training courses delivered by an external training provider.

This spells a $120 deduction for every $100 spent on skills and training. Eligible external training courses are those provided to employees in the country - in person or online - and delivered by training institutions registered in Australia.

The budget also allocates $1.3 billion to businesses to help fund apprenticeships. This will provide payments to new apprentices and wage subsidies for employers who take them on.

The budget includes $9 million annually for supporting women initiating higher-paying trade occupations.

Digital transformation

According to the Australian Taxation Office, small businesses with an aggregated annual turnover of less than $50 million will get an additional technology deduction for expenses and upgrades for depreciating assets. These include adopting portable payment devices, strengthening their cyber security systems or subscribing to cloud-based services.

Australian government galvanises digital transformation and skills training with small business tax deductions - Digital Transformation

When and how to claim tax deductions for small business

These measures will apply to expenses incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.

Claims for training expenses incurred by 30 June 2022 can be filed in the 2023 tax return. Claims for training expenses incurred between 1 July 2022 and 30 June 2024 can be filed in the income year when the expenditure is incurred.

Small business tax deduction in action

On the Budget website, you can find the story of Parrot Pipes Pty Ltd and other small businesses to get a better idea of how the boost can be leveraged. Parrot Pipes is a small business based in Queensland with 100 employees and an annual turnover of $40 million.

In May 2022, Parrot Pipes plans to purchase laptops for 50 employees, costing a total of $90,000. It builds on this investment in 2022 and 2023 by creating a new website with a $20,000 price tag. From 2023 to 20224, Parrot Pipes organises a series of external training courses for employees, up to $200,000.

Under the Government's new Technology Investment Boost and Skills and Training Boost, Parrot Pipes can deduct an extra $62,000 over the period. This helps the company reduce its tax bill by $15,500 and extra resources that Parrot Pipes can reinvest towards growing the business, be it in hiring more people, getting more space or expanding its market.

Learn more about Lumify Work (previously DDLS)'s flexible training solutions for small businesses. They include self-paced and drop-in options designed and curated to help you position your team better and scale service delivery. Courses include cybersecurity training, cloud computing and project management.

Considerations for your EOFY training budget

Given the 2022/23 Federal Budget and the end of the financial year, business leaders in charge of training and career growth need to consider how to make the most of your employee training budget and approach your learning and development plan for the next few months.

Australian government galvanises digital transformation and skills training with small business tax deductions - EOFY Training Budget

Intending to drive the digital economy, training to close IT skills gaps and to help staff maximise technology investments is at the top of the priority list for HR trainers, learning and development managers, and heads of technology departments.

Supporting ICT consulting services

Lumify Work (previously DDLS) is proud to partner with leading organisations in the IT industry to become an extension of their business. Technology consultants who support small businesses through cloud migrations and cyber security systems upgrades can add value by tapping into our range of 700+ training courses and our pool of training instructors.

This will ensure that acquiring new technology goes hand in hand with supporting teams - whether end users or specialists - in acquiring the skills needed for utilising the hardware and software.

The digital transformation and your skills training strategy

Understanding the technologies your team will invest in and the digital skills gaps you need to close will help you plan how to maximise your end-of-the-financial-year training budget. It will also help you identify when and how to use the small business tax deductions.

You can access a wide range of customised training options for your local team with Lumify Work (previously DDLS), whether on-campus, virtually or via our online and hybrid course options. View our corporate brochure to learn about the ICT training options you can provide to your employees. Feel free to contact us to enquire about our customised training solutions.

Download our eBook on grants for small businesses and training options.

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