Is staff AI training tax-deductible in Australia?

Generally yes. For an Australian business, the cost of training employees to do their current work is a business operating expense, and most business expenses are deductible when they relate directly to earning your income and you keep the records to show it. AI training for staff fits that test the same way a first-aid or software course does. Two things to know: the 20% Small Business Skills and Training Boost ended on 30 June 2024, and if you buy training from an overseas provider, a GST-registered business that quotes its ABN is not charged GST on it.

This is general information, not tax advice. Your accountant decides how it applies to your business.

When is staff training deductible?

The business.gov.au guide to tax deductions sets out the general rule: an expense is deductible if it relates directly to earning your business income, is for business rather than private use, and you can show records for it. Training your staff to use AI in the work they already do meets that test in the ordinary case. The ATO's own page on the training boost describes eligible training as expenditure that is "already deductible for your business".

Keep the invoice, the enrolment and a note of who attended and what for. Records generally need to be kept for five years.

Can I still claim the extra 20% training deduction?

No, for new spending. The Small Business Skills and Training Boost gave businesses with an aggregated turnover under A$50 million an extra 20% deduction, but only for expenditure incurred from 29 March 2022 to 30 June 2024, and only for training from a registered training provider. It does not apply to training bought now. It also never covered training for owners who are sole traders, partners or contractors rather than employees.

Do I pay GST on training from an overseas provider?

Usually not, if you are GST-registered and the training is for the business. The ATO's page on imported services and digital products says that if you give an overseas supplier your ABN and state that you are registered for GST, you should not be charged GST. In some cases the reverse charge applies instead, where the business accounts for the GST itself; your accountant will know whether it applies to you. If you were charged GST by mistake, ask the supplier for a refund with your ABN and GST status.

Can an employee claim AI training they paid for themselves?

Sometimes, but not if the employer pays or reimburses it. Self-education is only deductible for an employee when it has a sufficient connection to their current job, and nobody can claim an expense someone else paid for. If the business pays, the business claims it.

Does it matter whether the provider is an RTO?

For the deduction itself, no: the general rule does not ask whether the trainer is a registered training organisation. It mattered for the expired 20% boost, and it matters if your staff need a nationally recognised unit or VET funding, which only an RTO can provide. Square1 Ai is not an RTO, so its courses lead to a graded record of each person's work, not a nationally recognised qualification.

What should I keep for the claim?

• the tax invoice or receipt, showing the supplier and amount;
• if the supplier is overseas, a note of the ABN and GST statement you gave them;
• the names of the employees trained and the course dates;
• a line on why the training relates to their current work.

Square1 Ai trains small business teams in Australia live online, priced per person with no team discount. Prices are on the small business page, with sector pages for accounting firms and office admin and bookkeeping.