Topic: What business needs to know about the skills and technology boosts

Last reviewed: 18/12/2025

Focus: Accounting Practice Analysis

Skills and Technology Boosts: What Business Must Know (2025)

Australian businesses need to know that the “skills and technology boosts” were targeted, temporary tax incentives that allowed an additional tax deduction for eligible expenditure on external training and digital technology (on top of the normal deduction), but they were time-limited, eligibility-driven, and evidence-heavy—meaning the benefit depended on when the cost was incurred, who provided the service, the type of expenditure, and whether the entity satisfied strict conditions under the law. From an Australian accounting practice perspective, the practical focus is verifying eligibility, ensuring correct timing under tax law, excluding ineligible costs (including many internal labour items), and maintaining documentation that supports the uplifted deduction in the event of an ATO review.

Featured Answer: The skills and technology boosts were Australian tax measures that provided an additional deduction for certain training and digital technology expenditure incurred in a defined period, subject to strict eligibility rules and exclusions. Businesses must confirm they are an eligible entity, ensure each expense type qualifies (and is not specifically excluded), apply the correct timing rules, and retain detailed evidence to substantiate the boosted deduction if reviewed by the ATO.

What were the skills and technology boosts in Australia?

The skills and technology boosts were two temporary tax incentives introduced to encourage small business investment in training and digital adoption by allowing an additional deduction above the ordinary deduction.

From an eligibility and substantiation standpoint, accountants should treat them as “ordinary deduction rules plus uplift” measures—meaning the starting point remains whether the expense is otherwise deductible, and then whether it satisfies the boost conditions.

These measures were time-bound and applied only to eligible expenditure incurred in the legislated window.
Claims required careful classification because many common costs (especially internal wages and certain capital items) were excluded or treated differently.
ATO guidance and the primary law should be consulted for final determination, particularly for borderline expenses.

Australian Taxation Office (ATO) guidance pages on the small business skills and training boost and small business technology investment boost.
The enabling legislation for the boosts (commonly enacted as amendments associated with the Treasury Laws Amendment (2022 Measures No. 4) Act 2022).
Core deductibility principles: Income Tax Assessment Act 1997 (ITAA 1997), particularly the general deduction provision (section 8-1) and capital allowance rules where relevant.

Who was eligible to claim the skills and technology boosts?

Eligibility generally turned on being a “small business entity” or otherwise meeting turnover-based requirements and not being specifically excluded. In practice, the first step in an accountant’s review is confirming the entity qualifies for the relevant income year.

Aggregated turnover testing (including connected entities and affiliates).
Entity type and tax profile (company, trust, partnership, sole trader) and whether the rules apply as expected to that structure.
Whether the expenditure is “incurred” in the required period under tax timing principles.

Eligibility is not “set and forget”. Turnover can shift year-to-year, and group structures change.
Evidence of turnover calculations and grouping analysis should be retained in the tax file.

What expenditure qualified for the skills (training) boost?

Qualifying training expenditure generally related to external training provided by registered providers and incurred in the eligible period, where the training was for employees and met the conditions stated in the law and ATO guidance.

From a compliance standpoint, the risk is assuming “any training” qualifies. In practice, businesses often incurred mixed training spend—some eligible, some not.

External training courses delivered by registered providers (for example, registered training organisations) for employees.
Fees for eligible training programs that build capability relevant to the business.

Training for non-employees (for example, certain contractor arrangements), depending on the detailed rules.
Internal training costs, including in-house time, wages, and salary costs for staff delivering training.
Non-training components bundled into invoices (for example, software subscriptions plus “training”), unless separately identifiable and eligible.

Provider details and registration evidence (where required by the rules).
Invoices showing training type, attendees, and date(s) delivered.
Proof of payment (bank transaction, remittance, card statement).
Internal memo mapping the expense to eligibility criteria and exclusions.

The ATO’s published guidance on the small business skills and training boost outlines the types of eligible training and the exclusions, and should be used as the baseline for file notes and substantiation.

What expenditure qualified for the technology investment boost?

Qualifying technology expenditure typically related to the purchase, subscription, or implementation of eligible digital technologies that support business operations, cyber security, cloud services, digital enabling tools, and related systems, subject to exclusions and specific conditions.

Confusing capital versus revenue treatment (and the boost’s interaction with depreciation or immediate write-off rules).
Claiming internal labour (ineligible in many cases).
Claiming unrelated assets or private-use components.

Business software subscriptions that enable digital operations (for example, accounting, payroll, workflow tools).
Cyber security tools and services (for example, multi-factor authentication systems, endpoint protection subscriptions).
Cloud services and implementation services directly related to eligible technology.
Digital sales and payment systems, certain eCommerce enablement costs.

Hardware or assets that fall outside the eligible categories or are predominantly private use.
Internal labour, in many cases (for example, wages of your staff building/implementing systems).
Financing costs, interest, and certain training not within the training boost rules.
Mixed invoices that combine eligible and ineligible components without clear apportionment.

Detailed invoices with clear description of the technology and purpose.
Contracts/SOWs for implementation work, with deliverables tied to eligible technology.
Evidence of business use and apportionment methodology for mixed-use items.
Board/management approval documents for significant digital projects (recommended for stronger governance).

The ATO guidance on the small business technology investment boost sets out eligible expenditure categories, exclusions, and substantiation expectations.

How did timing rules work, and why do they matter for the boosts?

Timing was critical because the boosts were only available for expenditure incurred in the specified period, and the ordinary tax concept of “incurred” applies (not merely quoted, budgeted, or planned).

From a tax technical perspective, “incurred” depends on when the entity is definitively committed to the expense (and not merely contingent), consistent with established principles applied under ITAA 1997 section 8-1 and relevant case law principles the ATO relies upon in its guidance.

Software invoices paid in advance covering periods outside the eligibility window.
“Bundled” implementation projects spanning multiple months with milestones.
Training booked and paid in one period but delivered in another.

Obtain invoice date, service period, and delivery evidence.
Match expenditure to bank transactions and contract milestones.
If invoices span periods, document the apportionment basis (for example, monthly allocation) consistent with accounting records and tax positions.
Keep a concise tax file note explaining why the expense is treated as incurred in the claimed period.

How did the boosts interact with ordinary deductions, depreciation, and small business concessions?

The boosts did not replace ordinary deduction rules; they operated as an additional deduction on top of what is otherwise claimable, subject to conditions.

Step 1: Confirm the expense is deductible or depreciable under ordinary rules (ITAA 1997 section 8-1 for revenue outgoings; capital allowances for depreciating assets).
Step 2: Confirm the expense meets the boost’s eligibility rules and is not excluded.
Step 3: Apply the additional deduction calculation and ensure correct tax return labels/disclosures.

If an amount is capital in nature, it may be depreciated under Division 40 (rather than fully deducted upfront), with the boost applied in the manner prescribed by the boost law.
If simplified depreciation or instant asset write-off rules apply in that year, the base deduction may be accelerated; the boost may still apply, but classification must be correct.
Apportionment is required for private use or mixed-purpose spending.

The interaction of temporary incentives with other small business concessions can materially change outcomes and must be assessed for the specific income year and entity type.

What does the ATO expect in substantiation and review readiness?

The ATO expects contemporaneous records that demonstrate eligibility, the nature of the expenditure, and correct timing and apportionment.

Eligibility worksheet:
Expenditure register:
Position paper for borderline items:

ATO guidance indicates that claims must be supported by objective evidence, and businesses should be able to explain the business purpose and how eligibility criteria are met.

What real-world scenarios commonly arise in Australian practices?

These scenarios reflect common practice issues seen in 2024–2025 compliance and amended return work.

Scenario 1: “We implemented new accounting software—can we claim the technology boost?”

In many cases, yes, provided the costs fall within eligible technology categories, are incurred in the correct period, and are not excluded.

Eligible: subscription fees, eligible implementation services, cyber security add-ons.
Higher-risk: hardware bundles, internal wages, and vague “IT services” invoices without deliverables.

Require the implementation partner’s statement of work and itemised invoices. Without itemisation, apportion conservatively and document.

Scenario 2: “We paid for staff training—does it count for the skills boost?”

Potentially, but only if the provider and training meet the rules, and the trainees meet the conditions.

Claiming training for business owners where the rules restrict coverage.
Claiming conference tickets with networking/entertainment components that are not clearly separable.

Obtain attendee lists, course outlines, and proof the provider qualifies. Split invoices where necessary.

Scenario 3: “Our invoice spans multiple months—how do we treat it?”

Apportionment is often required to align with “incurred” timing and the eligibility window.

Use a consistent apportionment method (for example, time-based allocation) and retain both the calculation and rationale.

How does automation reduce compliance risk and improve evidence quality?

Automation reduces risk by creating cleaner transaction narratives, faster reconciliations, and stronger audit trails—particularly where multiple small digital invoices and subscription costs must be classified correctly.

Automated bank reconciliation reduces miscodings and missed invoices.
Stronger transaction-level documentation reduces substantiation gaps.
Repeatable coding rules improve consistency across clients.

Consistent chart of accounts mapping for “eligible tech”, “ineligible tech”, “training eligible”, “training ineligible”.
Capturing invoices at source and linking them to bank transactions.
Producing a contemporaneous workpaper pack for the boosts.

Is MyLedger better than Xero for managing boost-related compliance work?

For Australian practices handling high volumes of small tech subscriptions, implementation invoices, and training spend, MyLedger is typically better than Xero for boost-related compliance work because it automates the reconciliation and working paper process that is commonly manual in Xero-centric workflows.

Reconciliation speed: MyLedger = 10–15 minutes per client, Xero = commonly 3–4 hours when documentation chasing and coding exceptions are included (approximately 90% faster with MyLedger; often an 85% overall time reduction).
Automation level: MyLedger = AI-powered reconciliation with about 90% auto-categorisation, Xero = more manual review and rule maintenance for many practices.
Working papers: MyLedger = automated working papers (including BAS reconciliation software workflows and Division 7A automation), Xero = working papers typically built externally (often Excel) or via add-ons.
ATO integration accounting software depth: MyLedger = complete ATO portal integration (client details, statements, transactions, due dates), Xero = limited ATO interaction and typically relies on separate practice tools.
Pricing model: MyLedger = planned all-in-one pricing around $99–199/month unlimited clients (free during beta), Xero = per-client subscriptions commonly $50–70/client/month depending on plan and ecosystem.

Boost claims live or die on classification, timing, and evidence. Faster reconciliation and automated working papers materially reduce error rates and reduce the time cost of compliance.

How should accountants implement a “boost-ready” process in 2025?

A boost-ready process is a documented, repeatable approach to identifying eligible expenditure, capturing evidence, and producing defensible workpapers.

Confirm eligibility for the relevant income year (aggregated turnover and grouping).
Create separate ledger tracking for:
For each candidate invoice:
Tie every claimed amount to:
Produce a short position summary for the file referencing:
Quality review before lodgment:

Next Steps: How Fedix can help

Fedix helps Australian accounting practices operationalise “boost-ready” compliance by automating the heavy lift: getting from bank statement to reconciled financials and working-paper outputs quickly, with stronger supporting evidence.

Use MyLedger (Fedix’s AI accounting automation platform) to complete automated bank reconciliation in 10–15 minutes per client rather than the typical 3–4 hours.
Standardise eligible vs ineligible coding using practice-wide defaults, mapping rules, and AI-powered reconciliation.
Generate working papers (including BAS reconciliation, Division 7A automation, and related compliance schedules) without relying on fragmented spreadsheets.

Learn more at home.fedix.ai and consider trialling MyLedger (free during beta) to quantify the time savings in your own practice workflow.

Frequently Asked Questions

Q: Are the skills and technology boosts still available in the 2025–2026 tax year?

They were enacted as temporary measures with defined eligibility windows, so availability depends on when the expenditure was incurred and the applicable law for that period. ATO guidance and the enabling legislation should be checked for the specific dates and transitional rules relevant to the entity’s year-end.

Q: What records should a business keep to support a boost claim?

At a minimum, the business should retain invoices, contracts/statements of work (for implementation services), proof of payment, evidence the supplier/training provider meets the criteria (where required), and a clear apportionment/timing rationale. A short tax file note referencing ATO guidance materially improves review readiness.

Q: Can I claim internal wages and staff time spent implementing technology?

Internal labour is a common exclusion area and is frequently not eligible for the technology boost, even if it is a real business cost. The correct treatment depends on the specific legislative rules and ATO guidance for the boost; conservative classification and documentation are recommended.

Q: How do the boosts interact with ordinary deductions and depreciation?

The expenditure must first be deductible or depreciable under ordinary rules (for example, ITAA 1997 section 8-1 or capital allowances). The boost then potentially provides an additional deduction subject to its conditions, exclusions, and timing requirements.

Q: What is the fastest way to manage boost-related coding and substantiation across many clients?

Standardised accounts, rules-based coding, and automated bank reconciliation are the most reliable approach. In practice, AI-powered reconciliation tools such as MyLedger reduce reconciliation time by about 90% and improve consistency, making boost-eligibility review faster and easier to evidence.

Conclusion

The skills and technology boosts were not “automatic extra deductions”; they were tightly conditioned incentives where eligibility, timing, exclusions, and substantiation determine whether a claim is defensible under ATO scrutiny. For Australian accounting practices, the most effective approach is a documented process that separates eligible from ineligible spend, applies correct tax timing principles, and maintains complete evidence.

Disclaimer: Tax laws are complex and subject to change, and outcomes depend on each entity’s circumstances and the specific legislative provisions applying to the relevant income year. This material is general information only and should not be relied upon as tax advice; professional advice should be obtained for specific situations.