Saturday | 6 September, 2008
Computerworld
Budget's Fringe Benefits Tax overhaul cuts into IT
No more salary sacrificing laptops for the kids, software depreciation timeframe increased
Andrew Hendry 15/05/2008 15:23:46

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The test is something the Australian Tax Office (ATO) will need to clarify, said Vincent. The requirement already exists for mobile phones, and has now spread to cover all other electronic devices.

"We are expecting the ATO to put out guidance for what they consider to be primarily work related. We expect this to be raised at the National Tax Liaison Group, which is a meeting the ATO has with professional bodies, and I imagine the ATO will give some guidance there on these issues," she said.

The Treasury said the changes will restore the original intent of the FBT law and improve equity in the treatment of employee remuneration. According to the Treasury the combined effect of the measures will raise approximately $1.2 billion over the forward estimates.

Brazzale also said the period over which in-house computer software is depreciated will increase from 2.5 years to 4 years for expenditure incurred after 13 May 2008, with the straight line basis of depreciation the only method of depreciation allowable for in-house computer software. "The move to increase the effective life of computer software is somewhat bewildering. In the current environment, the effective life of computer software is much more accurately reflected by 2.5 years than 4 years. The effect of this change will be to defer the tax deductions for the depreciation. Ultimately, the deductions will be available merely over an extended period."

Brazzale said that in many cases businesses will, by the necessity of technological change, replace software after 2.5 years in which case it will merely write off the balance of the software's cost. The only impact will be slightly lower tax deductions in the earlier years.

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