Hey business owner… did you know your website design, build and maintenance costs are tax deductible, some in whole, and some on an ongoing/annual basis?
For the latest details about ATO deductions and your eligibility, visit:
Here is a selection of helpful narrative examples provided on the Australian Taxation Office (ATO) website:
Joe operates a suburban plumbing service. He arranges to have a website constructed with the following features. It will have his name and address and a description of the nature of work he will perform. The site also contains an email address which can be ‘clicked’ on so that potential customers can contact him directly. As the designer advised Joe that his simple site involves no software, has no sophisticated functionality and is used merely to advertise his business, the cost of constructing the site will be deductible under section 8-1 of the ITAA 1997. #yayjo
A website was developed at a cost of $4,000. It contained a shopping cart facility, which allowed on line customers to order stock as they moved through the site. The inclusion of the cart formed approx. 25% of the site development cost. After 12 months the Written Down Value (WDV) of the website is $2,400, consequently the cart has a WDV of $600. The shopping cart capability is completely removed and an immediate deduction for $600 is available. A replacement and more sophisticated ordering and stock management function is added at a cost of $6,000. The 21/2 year depreciation period for that software commences at the time of installation. The monthly upload of the stock database is an operational expense and is deductible when incurred.
Rebecca runs a small contract printing business. Rebecca purchases a $1,200 computer program designed to allow her to develop a website. The program ‘Webmeister’ enables her to draft text in a particular format and translates that text into the common Internet ‘mark up’ language html. Rebecca uses the program herself and designs a website which is then hosted for a fee by her Internet Service Provider. The cost of the program is software and is depreciable over 21/2 years. If Rebecca purchased a competing and cheaper program ‘Spiderweb’ for $250 the total cost of the program would be deductible in the first year as it is less than $300. As the website that Rebecca developed was no more than advertising her existing business (equivalent to an entry in the Yellow Pages telephone directory) any non software costs are considered to be of a revenue nature and deductible in the year the expenditure was incurred.
In the example above assume Rebecca decided to expand her printing business and start selling her own line of greeting cards that she had developed on her website. In that case the expenditure on items other than software in developing the website would be of a capital nature and not deductible as she would be adding to the structure of the business and creating a new revenue stream.
Academic Publishing Pty Ltd has operated for a number of years as a publisher and wholesaler of books which it distributes and sells to retailers. It then decided to establish a website for the purpose of retailing stock to the general public. Customers of its website are able to search a database of books and order online. The cost of the website represents a capital expense incurred in establishing a new arm of the business which is a structural addition to its existing operations. To the extent that the cost of developing the website is made up of non software costs they will be of a capital nature and not deductible. Software costs will be depreciable over 21/2 years under Division 46.
Rainy Day Insurances’ operates its business through a network of commission agents. It expands its business by setting up a website. To widen their customer base they purchase an ‘electronic insurance register’ containing a list of agents for a cost of $15,000 which they load onto their website. The $15,000 cost of acquiring the register is a capital expense notwithstanding that it may also be considered to be ‘content’ of the site.
No matter which web designer or web design service provider you choose, make sure you’re claiming correctly and supporting your business as best as possible.