ATO backflips on treatment of Web development costs

The Australian Taxation Office has reversed a proposal made last year to tighten the definition of tax-deductible software in relation to commercial Web site development.

On Wednesday, the ATO changed a draft ruling (DR 2000/6) it made in May 2000 to change the definition of ‘software', after the IT industry said it was "technically inaccurate", according to taxation specialist Deloitte Touche Tohmatsu. Some expenditure on commercial Web site development will now be deductible in the year the expense was incurred, as opposed to a write-off over a two-and-a-half-year period.

According to Deloitte Touche Tohmatsu's tax partner for technology, Stuart Osborne, the proposed ruling would have restricted certain businesses from eligibility to claim tax deductions on software used in the commercial Web site development process, which the ATO said involves any outlay made on designing, planning, testing, uploading of content or loading a site onto a server.

Under the Tax Office's new ruling (TR 2001/D6), software used to create ‘simple' Web sites is not a tax-deductible expense. Simple Web sites involve expenditure on documents that have been converted to HTML format or marked up with simple links, according to the ATO. Any spend on simple Web sites like these could be considered for full deductibility in the year the business incurred the cost.

Osborne told Computerworld that various IT industry bodies and Web development companies managed to reverse the ATO's draft ruling as they were opposed to the idea of determining what client work was or was not tax-deductible.

While Osborne believes the majority of companies will be happy with the outcome, he said there was a catch for startup companies in certain circumstances. For instance, "startups would not be eligible for tax relief when it came to Web site costs associated with new ventures of a capital nature", Osborne said.

Businesses that use software to build business-to-consumer or business-to-business e-tailing or e-procurement sites are only eligible for tax deductions over a two-and-a-half-year period, according to Osborne.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Helen Han

Computerworld

Comments

Comments are now closed.

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?