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Tax incentives for SME tech investors welcomed

by Kate Aubrey11 minute read
Tax incentives for SME tech investors welcomed

SMEs that invest in digital operations could benefit from tax incentives, as part of a draft legislation. 

The federal government has delivered the draft legislation to introduce a technology tax incentive for small to medium businesses, to support digital adoption by SMEs.

The Technology Investment Boost would provide a bonus of 20 per cent tax deduction for eligible expenditure incurred on expenses and depreciating assets that support digital operations.

Small businesses must have an aggregated annual turnover of less than $50 million to be eligible for the incentive, available until 30 June 2023.


Welcoming the government’s approach to embrace innovation and digitalisation, general manager asset finance at Resimac, Michael Moloney, said it will give asset finance brokers a reason to reach out to clientele.

“It gives them a reason to reach out to their clientele and discuss the options they may have around investing in or upgrading their assets that support digital operations, Mr Moloney said.

“It’s worth noting that there are an ever-increasing number of online/cloud-based apps that help businesses optimise their operations. [There] is a strong business case to provide equipment finance related to software services.

In addition, given that the majority of brokers are SMEs themselves, this government incentive gives them an opportunity to explore how they can invest in or upgrade their own technology to facilitate digital improvements, he said.

“SMEs account for circa 45 per cent of all people employed in the private sector, and any financial assistance provided here to help improve efficiencies and speed will make SMEs more competitive

, Mr Moloney said.

“The proposed technology investment tax incentive will be positive not just for SMEs, but for the broader economy.” 

The draft legislation released on 29 August, formed part of the productivity measures included in the March 2022 budget, that have not been legislated. 

An annual cap will apply so that expenditure up to $100,000 will be eligible for the boost, with the bonus deduction capped at $20,000 per year.

In addition, the government is consulting on tax incentives to support small businesses to train and upskill employees.

Worth more than $1.5 billion, the Technology Investment Boost and the Skills and Training Boost will be backdated to 29 March 2022 so small businesses can receive the full benefits.

The government is seeking stakeholders’ views on the exposure draft legislation and accompanying explanatory materials implementing this measure.

By making these tax incentives law and supporting small businesses, the Labor government said it was a “win-win for the economy” given the 3.7 million small businesses in Australia that employ nearly 8 million workers.

Small businesses with an annual turnover of less than $50 million will have access to a bonus of 20 per cent deduction for eligible expenditure on external training of employees by providers registered in Australia, until 30 June 2024.

Government makes move to ‘modernise’ business communications 

In the federal government swathe of policy amendments, it has also reintroduced a revised bill to “modernise business communications across a range of [Treasury] portfolio laws”.

The revised bill will clarify that Treasury portfolio regulators can hold hearings and examinations virtually and removes the previously proposed changes to credit laws that will be considered at a later date. 

It said this will ensure that reforms to business communications affecting the credit sector are considered in a clear and consistent way for consumers and businesses.

michael moloney asset finance ta w xllm


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