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BUDGET 08/09: Tax deductibility on in-house software development cut

Companies that develop in-house computer software will find tax deductibility of their expenditure will now be delayed. Deductions that were

Companies that develop in-house computer software will find tax deductibility of their expenditure will now be delayed. Deductions that were available over 2.5 years, will now be available over four years, according to Deloitte Tax Partner David Pring.

“It is a curious change as the rate of technological advances means that the useful life of software is generally becoming shorter rather than longer,” he says.

“Amid the hype of improving capability and reform of the taxation system, this change seems a regressive step because companies which develop and use software generally will get a lower tax break even if they update their software more frequently.

“It would have been better is the tax deductibility were available over a two-year period which is more realistic with the life of software.”

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