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. It is available for expenses you have incurred on staff training between 29 March 2022 and 30 June 2024.

To claim a bonus deduction for training expenses incurred before 30 June 2022, you will need to wait until you lodge your 2022-23 income tax return.

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 2022–23 income tax return and subsequent income years, however, if you provided any external staff training to employees in the 2021–22 income year, you will not be able to receive the 20% bonus deduction until lodging the 2022–23 income tax.

Other matters

Originally announced in the 2022 Federal Budget, this bill received royal ascent on 23 June 2023 and has now become law.



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