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  • In-house software



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Under the UCA rules, you can choose to allocate to a software development pool expenditure you incur in developing (or in having developed) in-house software you intend to use solely for a taxable purpose. Once you allocate expenditure on such software to a pool, you must allocate all such expenditure incurred thereafter (in that year or in a later year) to a pool – see Software development pools.

    If you have allocated such expenditure to a software development pool either before or since using the simplified depreciation rules, you must continue to allocate such expenditure to a software development pool and calculate your deductions under the UCA.


    • you have not previously allocated such expenditure to a software development pool and you choose not to do so this year, or
    • you incur the expenditure in developing in-house software that you do not intend using solely for a taxable purpose,

    you can capitalise it into the cost of the unit of software developed and claim deductions for the unit of in-house software under the simplified depreciation rules when you start to use it (or install it ready for use) for a taxable purpose.

    Deductions for in-house software acquired off the shelf by an small business entity for use in their business are available under the simplified depreciation rules. For example, such an item costing less than $1,000 will qualify for an outright deduction.

    Last modified: 14 Jul 2020QC 27915