The recent federal budget included a new 20 per cent increase in the amount small businesses can deduct when investing in new technologies. Firms should be making the most of this tax bonus by understanding what time-saving, efficiency-boosting technology can do for their practice.
Make sure to jump on the government’s tech tax break
Accounting and bookkeeping firms should seize the opportunity to claim a new 20 per cent tax break for investing in new technology which can make their work more efficient and effective.
Announced as part of the 2022 Federal Budget, the new $1 billion Technology Investment Boost will allow businesses with an annual turnover of less than $50 million to deduct an extra 20 per cent of the costs of expenses and depreciating assets that support digital uptake. This includes subscriptions to cloud-based services, portable payment devices and cyber security systems. In essence, this means any firms wanting to upgrade their accounting software between now and 30 June 2023 will now be able to claim the full cost as a deduction, plus an extra 20 per cent – a total of 120 per cent of the investment.
In his budget speech, treasurer Josh Frydenberg said he hoped the tech tax boost would encourage small businesses “that are embracing the digital revolution” by rewarding those that invest in new technologies.
For an accounting or bookkeeping firm, this represents an exciting opportunity to further improve their current ways of working and reclaim time in their day by bringing in new cutting-edge technology. In a recent study conducted by Dext, in partnership with Accountants Daily, 42 per cent of bookkeepers and 34 per cent of accountants said they spend two or more hours per day completing manual tasks they believe could be handled by technology.
“This new incentive provides fresh impetus for firms to seriously consider new tech investments which they may have been putting off. Think of it like this - for every $100 spent on tech you can reclaim everything plus the ATO will allow you an extra $20 deduction. And from that investment - if made wisely - will also stem additional efficiencies and improved profitability in the medium-to-long-term. That’s the kind of offer you don’t want to leave on the table,” says Nattika Munro CA, Senior Practice Solutions Expert at Dext.
“Firms should take some time to properly consider what technology will make their working lives easier, save them time and deliver improved service, so they can reap the benefits for years to come.”
Improving efficiencies with the cloud
When it comes to deciding where to use this incentive, firms should evaluate areas like which technology can make processes more efficient and therefore increase their capacity for higher-value client work.
For example, simplifying the process of collecting and processing paperwork can relieve a big burden. Studies have shown that systems which collect and automatically process paperwork can save 50 per cent more time compared to manually processing. This can be done through a program like Dext Prepare, which collects and extracts and processes paperwork, and Dext Commerce, which simplifies the collection and categorisation from e-commerce marketplaces, POS, and digital payment platforms.
Checking for errors is another process that can be automated, therefore easing the reliance on laborious manual processes. Setting up systems for automatically checking data and accuracy can be done easily through Dext Precision.
In addition, software can crunch data to provide more proactive insights on areas such as business performance, which can increase a firm’s high-value, billable advisory work.
With the incentive capped at $100,000 and only available until June 2023, firms must move on swiftly in order to take advantage.
“The treasurer specifically mentioned that one of the motivations behind this scheme was to make businesses more productive and competitive. This is certainly true for accounting and bookkeeping firms, who are not only an important part of the economy but a source of trusted advice for many other businesses negotiating ongoing uncertainty,” said Ms Munro.
“We urge all firms to look seriously at how to use this incentive to its full potential. And we certainly hope that whichever government we have post-Federal Election continues its commitment to incentives like these to facilitate the ongoing digital revolution,” she concluded.
How can our products help you?
Dext speeds up slow and manual processes. As a multiproduct platform, we combine accurate data extraction with cleanup tools and automated digital sales reconciliation. We connect with software you already use, with data that’s accessible in real-time – whenever you need it.
Dext Prepare collects and extracts your paperwork with 99% accuracy, then automatically processes it to your accountancy software. Giving you more time to focus on work that adds value.
Dext Commerce simplifies the collection and categorisation of data from e-commerce marketplaces, POS and payment platforms. All into a consolidated view and all in real time.
Dext Precision is a toolkit of intelligent data cleanup, workflow and compliance tools designed for Accounting and Bookkeeping Professionals.
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