The ATO recently issued a ruling outlining their view on the deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a website for use in the carrying on of a business.

Expenditure may be considered “revenue” in nature and is therefore generally deductible if it is incurred in maintaining a website. This relates to preservation of the website but does not include:
bulletaltering the functionality of the website
bulletimproving the efficiency or function of the website or
bulletextending the useful life of the website.

If however, 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 that case, an outright deduction cannot be claimed.

Peter Shields

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