Tax Deductions for Website Costs ?

Did you realise that for small business owners, training or consulting associated with the development or ongoing management of your website is probably tax deductible…

Website costs can be classified as either capital expenses, or ongoing running costs. If a business is new, website expenses incurred before the business starts may be included for deduction under special provisions.

Website running costs

Your websites ongoing running costs are usually recurring and readily identified as operating costs. They include such expenses as:

• domain name
• site hosting services
• training/consulting associated with ongoing management of the website
• content maintenance, such as uploading of images and text, amending text and/or data (e.g. prices)
• technical maintenance, such as security and other incremental platform updates

Your Websites running costs are usually claimable in full as a tax deduction immediately, in the year incurred.

Website capital costs

Broadly, there are three possible types of capital expense:

• website setup costs incurred before a business starts
• inhouse web development costs
• other capital costs

Capital expenses wouldusually be deductible by instalments over more than one tax year (i.e. depreciable).  The amount claimable in each year will depend on the nature of the cost, and when it is incurred…. However under current the Small Business instant asset write-off rules, with a threshold of $20,000, you should be able to claim most of your websites capital costs as an immediate deduction.

ATO Guidelines

The Australian Tax Office issued a ruling – TR 2016/3 Income tax: deductibility of expenditure on a commercial website, on 14 December 2016, which contains a number of practical examples which illustrate how deductibility of expenditure can be properly assessed.

We suggest that you confirm with your accountant, but under the current “simple depreciation rules” most costs associated with the development and management of your website are likely fall well within the current $20,000 limit so can be fully deducted in the year they are incurred.

This means that it may be possible for you to claim as a tax deduction Website/WordPress/SEO/Online Marketing /Analytics Training or Consulting that you book and pay for by the 30 June (even if it is not delivered until the next tax year).

Please contact us if you have any questions about the types of website development, training or consulting services we can offer