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Sunday, 5 August 2018

Software treated strangely by tax laws, part 1 ...

It's tax time, and small-medium enterprises are frantically evaluating what assets they can write off. Eligible assets include things like cars, vans, kitchens, machinery provided they cost less than $20,000. However, the exclusion of one particular asset from the instant deduction scheme is adding to the tax time blues. In-house software.
As it stands, in-house software is only deductible under the uniform capital allowances (UCA) rules or the simplified depreciation rules for small business entities. This lack of a tax break for SMEs means there is less of an incentive to invest in software and therefore innovate. By deliberately penalising low-tech companies, it is preventing them from delving into high-tech such as artificial intelligence which is set to have a hugely transformative effect on Australia’s economy. If we’re to establish ourselves as world-beaters in innovation then tax reforms are in order.

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