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  • Claiming website costs

    If you incur expenses creating or maintaining a website for your business, you may be able to claim the costs as a deduction.

    You can depreciate the costs of a website over time. You do this by various depreciation methods, including putting the expenses into a pool.

    However, special rules apply to in-house software you acquire or develop for business use, not for sale.

    If your expense is:

    • in-house software – use the prime cost method to deduct the cost each year
    • included in a software development pool – deduct the different proportions of the expense each year.

    If you have chosen to allocate expenditure on your software to a software development pool, website costs will have an effective life of five years if you incur them on or after 1 July 2015.

    Ongoing running and maintenance costs

    You can claim a deduction in the year you incur some ongoing expenses associated with running and maintaining your website. Some examples include domain name registration fees and server hosting costs.

    Example 1: Simplified depreciation rules

    In July 2015 your small business bought a $2,000 website hosting package. You also have to pay service fees of $50 a month, plus $50 a year for the domain name. You can claim a deduction of $2,000 in your 2015–16 tax return under the simplified depreciation rules, and a deduction for the monthly and yearly fees in the year you incur those expenses.

    End of example

    Example 2: Software development pool

    You set up a software development pool in 2012 when you set up your business’ first website. In August 2015, you incurred $4,500 in costs to update the software behind the website. You have to allocate this expenditure to the software development pool and can claim a deduction for it over five years.

    End of example

    See also:

    Last modified: 03 Apr 2017QC 47292