Small business skills and training boost

The training of staff is vital for businesses in ensuring compliance and maintaining best practice. It helps drive change and promote efficiency.  

There is an advantage to engaging providers who can view your business from the outside and help you and your staff see beyond the day-to-day workings.

Employers who engage external providers can take advantage of the Small Business Skills and Training Boost. This Boost allows for claiming an extra 20% bonus deduction for eligible training expenditure for small businesses with an aggregate turnover of less than $50 million.

This bonus is to encourage businesses to invest in the training of their staff and build a more productive workforce.  

To be eligible for the bonus deduction:

• The expenditure must be for training employees, either in-person in Australia, or online. There is no requirement for employees to be physically located in Australia when undertaking online training. 
• The bonus deduction is only available for expenditure incurred on external training for employees that is provided by certain registered training providers. 
• The training provider must meet relevant registration requirements at the time the expenditure is incurred. 
• The cost of in-house or on-the-job training is not eligible expenditure for the purpose of the bonus deduction. 
• The registered training provider must not be the small business or an associate of the small business.
• The expenditure must be deductible.
• The expenditure must be incurred within a specified period between 29 March 2022 and 30 June 2024
• Enrolment for the training must be on or after 7.30pm, 29 March 2022.
• The training must be incurred for the purposes of directly improving how the business produces its income.
• Only the amount charged by the training organisation is deductible. In some circumstances, this might include incidental costs such as manuals and books, but only if charged by the training organisation.

Which entities are eligible?

To access the Small Business Skills and Training Boost, the business needs to be a small business entity. Your aggregated annual turnover must be less than $50 million for the income year in which you incur the expenditure.

The training boost is not available to:

• Sole traders
• Partners in a partnership
• Independent contractors (who are not employees)
• Associates of the business such as a relative, spouse or partner of an entity or person

Example: 

Pets Pty Ltd is a small business entity that operates a veterinary centre. The business takes on a new employee to assist with jobs across the centre. The employee has some prior experience in animal studies and is keen to upskill to become a veterinary nurse.

The business pays $3,500 (GST exclusive) for the employee to undertake external training. The bonus deduction is calculated as 20% of 100% of the amount of expenditure that can be deducted under another provision of the taxation law. In this case, the full $3,500 is deductible as a business operating expense. Assuming the other eligibility criteria for the bonus deduction are satisfied, the bonus deduction is calculated as 20% of $3,500. That is, $700.

The business also pays $4,400 (GST inclusive) for 2 of its employees to attend an external training session. Pets Pty Ltd is registered for GST and entitled to claim $400 as a GST credit in their BAS. The eligible expenditure for the small business skills and training boost is the amount of expenditure less the GST amount claimed as an input tax credit ($4,000). 

The bonus deduction is calculated as 20% of $4,000, which is $800.

How can RSM help?

We can provide further assistance and guidance in determining your eligibility for the skills and training boost.  Contact your local RSM office today.