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Claiming website expenses

The setup and maintenance of a website can be a costly expense and the rules in relation to what can be claimed are not always clear.

Many of today’s small businesses employ the services of a web developer to take care of getting their website up and running since they don’t have the time or expertise to be able to do it themselves.

Often, this can be an expensive venture. But luckily, small businesses can claim deductions for website development costs.

Businesses that are already up and running with an aggregated turnover of less than $2 million can use the simplified depreciation rules.

That means if the cost of the website development is less than the instant asset write-off threshold of $20,000, owners can claim a deduction for the full expense amount in the income year they incur the expense.

Where the website costs the same or greater than the instant asset write-off threshold, owners can allocate it to a general small business pool.

Business owners cannot use the simplified depreciation rules if they choose to allocate expenditure on the software to a software development pool.

When the simplified depreciation rules do not apply, website costs have an effective life of five years if the business incurred them on or after 1 July 2015. If the expense is:

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

Business owners are also able to claim an outright deduction for specific running and maintenance costs, such as server hosting fees, domain name and registration fees in the same income year the expenses are incurred.

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