“Crypto” is the latest buzz word in society, with everyone wanting to try their luck in this new market. Whilst there has been little governance in prior years, the ATO has started to crack down on crypto currency transactions. Many of the crypto trading platforms available today now report your transactions straight to the ATO and are known as Australian cryptocurrency designated service providers.
This raises some concern for investors, who in the past, have not reported their crypto sales. The ATO is now also able to back date prior year information using their data matching software.
As a result of these latest changes, it has become important to disclose all crypto investments to your accountant before lodging your Income Tax returns, as this may raise some flags with the ATO should the sales data not match their records.
Crypto investments are, and have always been reportable, however the ATO is now making a targeted effort to ensure these sales are disclosed.
Crypto transactions are treated the same way as standard shares, and like foreign transactions they must be converted into Australian dollars at the point of the sale. The capital gain event generally occurs when you sell, transfer or gift a share, however in the case of cryptocurrency, this also includes trades, swaps, exchanges which are only some of the crypto type transactions.
The capital gain or loss is the sale amount net of the purchase costs associated and are subject to a 50% discount should the asset be held longer than 12 months, which can also be offset against any losses made.
At GeersSullivan we have relevant experience in handling cryptocurrency transactions and are starting to see more clients with these investments as time passes. Should you have any questions or need assistance with lodgement, please get in touch with one of our team members on (08) 9316 7000 or admin@gscpa.com.au.
As part of the 2022/23 budget, the Australian Government announced it will support small business through a technology investment boost.
Small business * who incurred business expenses and depreciating assets that support their digital adoption such as cyber security systems or subscription to cloud based services, will be able to deduct an additional 20% of the cost.
* With an aggregated annual turnover of less than $50 million.
Businesses may continue to deduct expenditure that is ineligible for the bonus deduction under the existing tax law. This is currently in the process of passing through law.
An annual $100,000 cap will apply to each qualifying income year. Businesses can continue to deduct expenditure over $100,000 under existing law.
When does the 120% technology bonus deduction apply?
Applies to expenditure incurred from 7.30pm AEDT 29 Match 2022 to 30 June 2023.
How to claim the 120% technology bonus deduction?
For the eligible expenditure made between 7.30pm AEDT 29 March 2022 to 30 June 2022,
Claim the expenditure as usual, and
Claim the additional 20% bonus deduction for this period in your 2022-23 tax return
For eligible expenditure incurred from 1 July 2022 to 30 June 2023
Claim the entire 120% in your 2022/23 tax return
What is the maximum additional deduction you can claim?
The maximum bonus deduction a small business taxpayer can claim is $20,000 ($100,000 x 20%).
Expenditure eligible for the bonus deduction
To be eligible for the bonus deduction, expenditure must be incurred wholly or substantially for purposes of an entity’s digital operations or digitising the entity’s operations. That is, the expenditure must have direct link to the entity digital operations.
This may include, but not limited to;
Digital enabling items – computer and telecommunication hardware, software, systems and services.
Excluded expenditure?
The following expenditure is excluded from the bonus deduction, even where the taxpayer meets the requirements
Salary & Wage Cost
Capital works
Financing Costs
Training and Education Costs
Trading Stock Expenditure
Calculating 120% of expenditure
The bonus deduction is calculated at 20 per cent of the total amount of eligible expenditure, which caps at $20,000 per income year or specified time.
Total Expenditure
$100,000.00
Deduction
@ 20%
Additional maximum deduction claimed
$20,000.00
Total Deduction Claimed
$120,000.00
This is a one-off bonus deduction in respect of the expenditure. Expenditure must be deductible under a taxation provision. If the business is registered for GST, the GST excluded amount is expenditure value.
Cap on bonus deduction
The total expenditure eligible for the bonus deduction is effectively $100,000 over the relevant time period such that entities can generally claim a maximum bonus deduction of $20,000 per relevant time period.
Different cap rules apply if an entity’s income year begins before 1 July 2022. This is known as “early balancer”. The early balancer can claim a maximum bonus deduction of $20,000 for the early balancer first time period (from 7:30pm ACT) on 29 March 2022 to the end of their 2022-23 income year.
For early balancers, the first $20,000 cap may be spread over two income years. (7.30pm ACT) on 29 March 2022 to the end of the 2021-22 income year and also the 2022-23 income year.
Early balancers can then claim up to a maximum bonus deduction of $20,000 during the period from the start of their 2023-24 income year to 30 June 2023.
This ensures that all entities can claim up to a maximum bonus deduction of $40,000 for the period from 7:30pm on 29 March 2022 to 30 June 2023.
Timing of claim
Normal Balancer
Bonus deduction for expenditure incurred in the 2022 income year, will be claimed in there 2023 income tax return. Bonus deduction for expenditure incurred in 2023 income will also be claimed in 2023 tax return.
What does this mean for our clients?
In short, clients purchasing digital enabling items, digital media and marketing or e-commerce business expenditures can be eligible for the bonus deduction in FY 2023 or FY 2024 depending on if they are a normal or early balancer.
Tax deductible expenditure items such as computers, computer software, hardware, subscription to cloud base services, cyber security systems fall under the technology booster scheme.
Therefore, it is important to make sure your accounting records are correct and supplied with the correct supporting documentation.
