Get a new website for your business and claim the expense as a tax deduction – up to $20,000
All the more reason to get on with that new or upgraded website you keep promising yourself or your business to increase your sales, awareness, marketing, messaging and professionalism.
This federal legislation is pitched primarily at small business owners. You can write-off the expense of the asset instead of claiming the deduction over a number of years. So, any small business entity with less than $2 million worth of turnover each year is eligible for this instant tax write-off and depreciation on the assets costing less than $20,000. Obviously your business must be actively trading to be eligible.
This incentive was first initiated in 2018 and was set to expire on June 30, 2018 but the federal government has extended the offer and Treasurer Josh Frydenberg actively promoted it during his Federal Budget announcement in May 2019.
To be eligible, you must:
- be a small business as recognised by the ATO
To find out how small businesses are defined, visit Small Business Entity Concessions – Eligibility.
- cost less than the instant asset write-off threshold
- be purchased and used in the year the write-off is claimed
Find out more at Instant Asset Write-Off.
Previous information on claiming website costs
If you incur expenses with the creation and/or maintenance of a website for your business, you can claim the costs as a deduction.
You should depreciate the costs of a website over time. Do this by putting the expenses into what the ATO calls a pool, a bundled account for recording depreciation expenses.
However, special rules apply to in-house software you acquire or develop for business use, not for sale. We will not address this issue as it does not apply to websites developed as a public facing sales and marketing tool for your business.
If your expense is included in a website development pool, deduct the different proportions of the expense each year.
If you have chosen to allocate expenditure on your website software to a software development pool, website costs will have an effective life of five years.
Ongoing running and maintenance costs
You can claim a deduction in the year you incur some ongoing expenses associated with running and maintaining your website. Some examples include domain name registration fees and server hosting costs.
Example: Simplified depreciation rules
In July 2018, your small business paid $4,000 for a website. Your business also purchased annual hosting of $300 for the website and $40 a year for the domain name. You can claim a deduction of $4,000 in your 2018–19 tax return under the simplified depreciation rules, and a deduction for the yearly fees in the year(s) you incur those expenses.
ATO – Capital assets and expenses:
ATO – Calculating pool events: