Income Tax Assessment Act 1997



Division 40 - Capital allowances  

Subdivision 40-D - Balancing adjustments  

Operative provisions

SECTION 40-335   Deduction for in-house software where you will never use it  

You can deduct expenditure you incurred on * in-house software if:

(a) you incurred the expenditure with the intention of using the software for a * taxable purpose; and

(b) the expenditure relates to a unit of software that you have not used or had * installed ready for use; and

(c) the expenditure is not allocated to a software development pool (see Subdivision 40-E ); and

(d) in the * current year, you have decided that you will never use the software, or have it installed ready for use.

The amount that you can deduct in the * current year is:

(a) the total of your expenditure on the * in-house software in the current year and any previous income year; less

(b) any amount of consideration you *derive in relation to the software or any part of it (but no more than the total in paragraph (a));

but only to the extent that, when you incurred the expenditure, you intended to use the software, or have it * installed ready for use, for a * taxable purpose.


Shannon has abandoned a software project that she was working on. She could not deduct expenditure on the project for the current year or any previous income year under any other provision. Shannon can deduct it under this section, to the extent that she intended to use it, or have it installed ready for use, for a taxable purpose.


If an amount of the expenditure is recouped, the amount may be included in her assessable income: see Subdivision 20-A .


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