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Software Development

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Newbie

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I have a small business client  who is developing a software application to onsale to their clients. It is being developed with a product called Filemaker. What is the treatment of the expenses and sales in my clients ledger. The end product could be sold numerous times

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Champion

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Hi @pb1949 

 

Is software going to be a new source of income for the client? Is it expected to be significant enough to warrant it's own company/ABN/etc?

Any income and expenses should be kept seperate from any other existing business for clarity on the profitability of the endeavour.

 

If it's going to be managed within a single accounting file, you may want to create a create a class or tracking category in order to allow for this in addition to any relevant new ledger accounts. If the client already uses the classing/tracking for existing business purposes, you may want to seperate the new software income and expenses into a more basic accounting file, while it is in the "startup" phase and work from there. 

For ease of getting taxable income (without knowing the business structure) you may want to keep it all in the same place, so the easiest option is to create new ledger accounts to "carry" the transactions seperately, if they need to be adjusted later as determined by the tax accountant.

Additionally, if you're thinking that the software development is for R&D, I'd suggest reading on the requirements and eligibility here

1 REPLY 1
Highlighted

Best answer

Champion

Replies 0

Hi @pb1949 

 

Is software going to be a new source of income for the client? Is it expected to be significant enough to warrant it's own company/ABN/etc?

Any income and expenses should be kept seperate from any other existing business for clarity on the profitability of the endeavour.

 

If it's going to be managed within a single accounting file, you may want to create a create a class or tracking category in order to allow for this in addition to any relevant new ledger accounts. If the client already uses the classing/tracking for existing business purposes, you may want to seperate the new software income and expenses into a more basic accounting file, while it is in the "startup" phase and work from there. 

For ease of getting taxable income (without knowing the business structure) you may want to keep it all in the same place, so the easiest option is to create new ledger accounts to "carry" the transactions seperately, if they need to be adjusted later as determined by the tax accountant.

Additionally, if you're thinking that the software development is for R&D, I'd suggest reading on the requirements and eligibility here