Skills & Training 120% Tax Deductions
Small businesses get a bonus tax deduction on top of the allowable deduction for training their employees.
Set to expire on 30 June 2024
Ensure to take advantage of the incentive before 30 June 2024, on all eligible external training courses delivered to a business's employees by a registered training organisation in Australia.
Businesses with an aggregated turnover of less than $50 million are entitled to a bonus tax deduction of 20% for eligible external training costs for staff.
Available for expenses incurred on staff training between 29 March 2022 and 30 June 2024.
Eligible expenditure
Eligible expenditure refers to external training courses delivered to a business's employees by a registered training organisation in Australia.
To qualify for the bonus deduction, the external training organisation must be registered in Australia to complete the training. The additional deduction is not available for on-the-job or in-house training costs.
Deductibility
In order for your business to claim a tax deduction under ITAA 1997 s 8-1, you are required to show that the expenditure is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.
The bonus deduction is available for your employees only. If you are a sole trader or partner in a partnership, you will be able to make a tax deduction claim under self-education expenses section of your individual tax return. Your associates and independent contractors are specifically excluded from the eligibility criteria.
Training a new employee who requires upskilling for their new role is also eligible for the bonus deduction.
How to claim the bonus deduction?
You can claim the bonus deduction in your 2023 income tax return and subsequent income years.
If you have any questions, please contact our office. We would be delighted to assist you further.
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