Digital adoption can score you a 20% bonus deduction. Find out how
Last reviewed January 2023
A bonus deduction is available for your business for expenses you incur in becoming a digital business. If your business has an aggregated turnover of less than $50 million, you are eligible for the bonus deduction.
The bonus deduction will be 20% of the cost incurred for business expenses or depreciable assets that support a digital adoption, such as:
Digital enabling items such as computer hardware and software, and systems and services that form and facilitate the use of a computer network
Digital media and marketing such as audio and visual content that can be created, accessed, stored and viewed on digital services
E-commerce items that support digital payment systems and online transactions, and
Cyber security systems and monitoring services
The bonus provides an opportunity for businesses to upgrade their technology and increase their competitiveness in the marketplace.Certain expenditures such as salary & wages, financing or training costs, and expenses incurred in developing in-house software are not eligible for the bonus deduction.
An annual bonus deduction of $20,000 will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the bonus deduction. As the bonus deduction is available in two financial years, an overall maximum bonus deduction of $40,000 is available.
Any eligible costs incurred from 7:30pm (AEDT) on 29 March 2022 to 30 June 2023 are included. However, expenditure incurred in the 2021-22 income year will only get the bonus deduction when you lodge your 2022-23 income tax return.
If you have purchased a depreciating asset for the digital adoption, this asset must be first used, or installed ready for use, before 1 July 2023 to qualify for the bonus deduction.
This measure was originally announced by the former government in the 2022 Federal Budget. It is expected that it will pass through the parliamentary process and become law.
If you have any questions, please call our office. We would be delighted to assist you further.
