The ATO has released a public taxation ruling covering the ATO’s views on the deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a website for use in the carrying on of a business.
Importantly, if the expenditure is incurred in maintaining a website, it would be considered ‘revenue’ in nature, and therefore generally deductible upfront.
This would be the case where the expenditure relates to the preservation of the website, and does not: alter the functionality of the website; improve the efficiency or function of the website; or extend the useful life of the website.
However, if the expenditure is incurred in acquiring or developing a commercial website for a new or existing business, or even in modifying an existing website, it would generally be considered capital in nature (in which case an outright deduction cannot be claimed).
Editor: Please contact us if you want any guidance about the ATO’s latest views on this important issue.