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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 do 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 entering the STS, 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 which 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 STS 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 STS taxpayer for use in their business are available under the STS rules. For example, such an item costing less than $1,000 will qualify for an outright deduction.
Last modified: 18 Jul 2006QC 27742