Treasury Laws Amendment (2022 Measures No. 4) Act 2023 (29 of 2023)

Schedule 4   Skills and Training Boost

Income Tax (Transitional Provisions) Act 1997

1   After section 328-440

Insert:

328-445 Bonus deduction for upskilling employees of small business entities etc.

Initial bonus deduction - 2022-23 income year for normal or late balancers

(1) You can deduct 20% of particular expenditure for the 2022-23 income year if:

(a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and

(b) you incur the expenditure in the period:

(i) starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and

(ii) ending at the end of the 2022-23 income year; and

(c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and

(d) section 328-450 applies to the expenditure.

Initial bonus deduction - 2023-24 income year for early balancers

(2) Subsection (1) does not apply if your 2022-23 income year starts before 1 July 2022. Instead, you can deduct 20% of particular expenditure for your 2023-24 income year if:

(a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and

(b) you incur the expenditure in the period:

(i) starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and

(ii) ending at the end of your 2023-24 income year; and

(c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and

(d) section 328-450 applies to the expenditure.

Later bonus deductions

(3) You can deduct 20% of particular expenditure for an income year (the current year ) if:

(a) the current year is after:

(i) if your 2022-23 income year starts on or after 1 July 2022 - your 2022-23 income year; or

(ii) if your 2022-23 income year starts before 1 July 2022 - your 2023-24 income year; and

(b) you are a small business entity, or an entity covered by subsection (4), for the current year; and

(c) you incur the expenditure in the current year and before the end of 30 June 2024; and

(d) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and

(e) section 328-450 applies to the expenditure.

Businesses with turnover under $50 million

(4) An entity is covered by this subsection for an income year if:

(a) the entity is not a small business entity for the income year; and

(b) the entity would be a small business entity for the income year if:

(i) each reference in Subdivision 328-C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and

(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection.

These are bonus deductions under the Income Tax Assessment Act 1997

(5) The Income Tax Assessment Act 1997 has effect as if this section and section 328-450 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997.

(6) Sections 8-10 and 355-715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section.

328-450 Expenditure eligible for the bonus deduction for upskilling employees of small business entities etc.

(1) This section applies to expenditure if:

(a) you incur the expenditure for the provision of:

(i) in-person training for one or more of your employees located in Australia; or

(ii) online training for one or more of your employees; and

(b) at each time you incur any of the expenditure for any of the training provided by a particular provider:

(i) the provider is a registered body of a kind listed in subsection (2); and

(ii) if the provider is a registered body of a kind listed in paragraph (2)(b), (c) or (d) - the training is within the provider's scope of registration for that kind of registered body; and

(c) none of the providers of the training is you or an associate of you; and

(d) each enrolment, or arrangement, for the provision of the training is made or entered into at or after 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and

(e) the expenditure is charged, directly or indirectly, to you by the providers of the training.

Note: Paragraphs (b) and (c) mean this section will not apply to expenditure for on-the-job training or training provided by you in house.

(2) For the purposes of paragraph (1)(b), the kinds of registered bodies are as follows:

(a) a registered higher education provider (within the meaning of the Tertiary Education Quality and Standards Agency Act 2011);

(b) a NVR registered training organisation (within the meaning of the National Vocational Education and Training Regulator Act 2011);

(c) a registered education and training organisation (within the meaning of the Education and Training Reform Act 2006 (Vic.));

(d) a registered training provider (within the meaning of the Vocational Education and Training Act 1996 (WA)).