It’s coming to the end of the financial year and each year we have clients ask us how do they go about claiming their website on tax?
Recently, the Australian Tax Office (ATO) published an important article that explains exactly what you’re entitled to do with your tax return.
If your business pays for a website, here are some important points to remember about claiming the costs:
- If you spend money before your business starts, then you can claim the cost over five years once you start.
- If you spend money after your business starts and you pay:
- more than $1,000 you can claim the cost over four years or in a general small business pool
- less than $1,000 you can claim that cost as an outright deduction.
Your business can also claim an outright deduction for ongoing expenses associated with running and maintaining your website, such as domain name registration fees and server hosting costs.
Here are three examples that explain the different tax deductions.
1. You’re getting ready to start a business and you spend $2,000 for a website design. The $2,000 you spent before your business started can still be claimed against your business income over five years.
2. You’re in business and choose a business website hosting package that costs you $4,000 to set up. You also have to pay $350 a month, plus $50 a year for the domain name. The $4,000 can be claimed over four years or in a general small business pool. The monthly and yearly fees can be claimed as a deduction in the year you incur the expense.
3. You run a small business and have decided to promote your services online. You buy an $800 static website and pay $100 a month for hosting. The $800 can be claimed as an outright deduction, and you can also claim the monthly hosting fees as a deduction against your business income.