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Are your website costs tax deductible?

The ATO has provided business owners with further guidance on the deductibility of website costs in a recent Taxation Ruling.

The Tax Office considers a commercial website as a website which is used in the course of a business, irrespective of whether it is used directly to produce income. This does not include software provided on the website for installation on the user’s device.

Hardware, the right to use the domain name and content available on or incorporated into a website that has independent value to the business are considered separate from a commercial website.

The tax deductibility of a website depends on whether the expenditure on a commercial website is revenue or capital in nature under section 8-1.

Examples of expenditure which are tax deductible in the year incurred include:
– Periodic operating, registration and licensing fees
– Expenditure incurred in maintaining a website
– Modifications to a website that add minor functionality or make minor enhancements to existing functionality
– Domain name registration fees and server hosting costs
– Maintaining a social media presence and updating content mainly for marketing purposes
– ‘Off-the-shelf’ software that is licensed periodically

Costs that are ‘capital’ in nature are generally claimable over a number of years. Examples of capital expenditure include:
– Labour costs that are directly referable to the enhancement of the profit-yielding structure of the business
– ‘Off-the-shelf’ software products where the product provides an enhancement of the profit yielding structure of the business
– Acquiring or developing a commercial website for a new or existing business
– Modifications resulting in structural advantage
– Extended or new functionality

In-house software
Expenditure that is not deductible under section 8-1 may be ‘in-house software’ and deductible under the capital allowances regime. The expenditure may be deducted over 5 years from the time the in-house software is first used or installed ready for use.

If the expenditure on in-house software is incurred through developing computer software, the expenditure may alternatively be allocated to a software development pool and deducted in accordance with the pool rules.

For small business entities that choose to use the simplified depreciation rules and do not allocate the expenditure to a software development pool, the expenditure is deductible:
– immediately where the asset costs less than the instant asset write-off threshold, and
– otherwise, in accordance with the general small business pool rules.

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News

What to consider when consolidating your super

August 27, 2020

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds’ policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready: