A website tax deduction is available to most Australian businesses: the ATO says if you create or maintain a website for your business, you can claim the associated expenses as a deduction. The catch is timing. Some website costs come off your taxable income in the year you pay them. Others are capital costs, claimed over several years or, for eligible small businesses, written off in one go.
This guide is for small business owners who pay for a website, or are about to, and want to know what that means at tax time. It explains the ATO's own rules in plain English: the difference between capital and revenue costs, how hosting and domain fees are treated, what counts as maintenance versus an upgrade, and how the instant asset write-off works for the 2026-27 income year.
This is general information, not tax advice. It is based on what the ATO publishes, mainly Taxation Ruling TR 2016/3. Your circumstances may change how the rules apply, so check with your accountant or a registered tax agent before you claim.
Can you claim website costs as a tax deduction?
Yes, if the website is used in your business. The ATO's three golden rules for any business deduction apply to websites too:
- It must be for your business. The expense has to be a business expense, not a private one.
- Only the business portion counts. If something is used partly for private purposes, you claim only the business share.
- You need records. Keep invoices and receipts that show what you paid and what it was for.
The ATO's detailed view on websites is in TR 2016/3, "Income tax: deductibility of expenditure on a commercial website". It is a public ruling, which means if you rely on it and it turns out to be wrong for your situation, the ATO must still apply the law to you the way the ruling sets out. It covers buying, building, maintaining and changing a business website, plus domain names.
One timing point matters. Costs from before your business started can be treated differently. The ruling's example of a hobby website that later becomes a business says hosting and maintenance fees paid before the business began are private, while the build cost becomes deductible over time once the site is used in the business.
Is a website a capital or revenue expense?
Everything about a website tax deduction depends on this one question. The ruling says whether a website cost is deductible straight away depends on whether it is capital or revenue in nature.
- Revenue expense: an everyday running cost of the business. You generally claim it in the year you incur it. The ATO also calls these operating or working expenses.
- Capital expense: a cost that creates or improves something lasting in your business. You can't claim it all at once under the normal rules. It is claimed over time, unless a small business concession lets you write it off immediately.
The ATO's position is that acquiring or developing a website, for a new or existing business, is capital expenditure. In one example in the ruling, a boutique pays a developer to build a simple one-page site and the ATO calls it "the digital equivalent of a permanent hoarding". It's a lasting part of the business, not a one-off advertisement, so the build cost is capital even though it was paid in instalments.
Running the site afterwards is different. The ATO lists the costs of running a commercial website, such as site maintenance and content updates, as operating expenses you can generally claim in the year you pay them.
Is website hosting tax deductible? Ongoing costs you claim each year
Most of what you pay to keep a website online is a revenue expense. The ATO says you can claim ongoing website running costs in the year they occur, and names domain name registration fees and server hosting as examples. If you're not sure what hosting covers, our guide to what website hosting is and what it includes explains it.
- Hosting: periodic web hosting fees are revenue expenses, deductible over the period they relate to.
- Domain registration and renewals: periodic registration fees, including the first one, are deductible when paid. If a single payment covers more than 13 months, it's spread over the period it covers.
- Maintenance: fixing faults and keeping the site working as it does now is a revenue expense.
- Content updates: new articles, refreshed photos, updated prices and opening hours are maintenance.
- Browser and phone compatibility: regular updates so pages keep displaying correctly on new devices and browsers are generally deductible.
- Subscriptions and licences: software you pay for periodically, such as a subscription, is a revenue expense.
Buying a domain is the exception. If you pay a once-off amount to secure an existing domain name, for example at auction, that payment is capital and is not deductible. It forms part of the cost base of the domain for capital gains tax. Registering a new name through a registrar involves no capital amount. Our guide on how to buy a .com.au domain name covers registration.
Small changes also count as revenue. The ruling's example of adding an extra payment option to an online shop for $500 is treated as a revenue expense, because it extends existing functionality rather than adding something new. For what these running costs typically look like, see our breakdown of website maintenance costs.
Is website development tax deductible? Builds, redesigns and upgrades
Building a website is capital. Changing one depends on how big the change is. The ruling says it's a matter of fact and degree, judged from a practical business point of view.
Changes the ATO treats as capital
- A new website, whether it replaces an old one or is your first.
- Significant new functionality, such as adding online sales with a catalogue, cart and payments, or a custom online ordering system.
- Replacing a material part of the site, or a planned program of upgrade work.
- A separate site, such as a microsite that is a lasting part of the business, or a separate mobile-only site.
- Moving content to a new site. The cost of migrating content from an old website to a new one is capital, as part of setting up the new site.
Changes the ATO treats as revenue
- Maintenance and bug fixes.
- Minor enhancements to existing features.
- Making an existing site work well on phones. In the ruling's restaurant example, adapting the existing site to display properly on mobile is an ordinary business expense, while building a separate mobile site would be capital.
- Temporary changes, such as a short promotional redesign that is removed afterwards.
Factors the ATO weighs include the role of the website in your business, the size of the change, how much planning and money went into it, who had to approve it and how long it's expected to last. If you're weighing up a rebuild, our guide to a website redesign versus a new website explains the practical difference. For tax purposes, a full rebuild is likely to be capital either way.
Outsourced or built in house
The same principles apply whether you pay an outside developer or your own staff do the work. The ruling says labour costs, including contractor and employee costs, are ordinarily a deductible running cost, but labour directly tied to building or significantly improving the site is capital. Where a job is partly both, the cost has to be split on a reasonable basis.
A leased website is treated differently. If you rent a site from a developer and have no right to become its owner, the ruling says the regular lease payments are deductible as you pay them.
How a website tax deduction works for build costs in 2026-27
Capital website costs aren't lost. The ruling says a commercial website that is mainly used to interact with your customers is "in-house software", a term from the tax law for software a business acquires or develops mainly for its own use. In-house software is a depreciating asset, so its cost can be deducted. There are three ways the ATO describes.
1. Over five years
Under the general rules, expenditure on in-house software may be deducted over 5 years from the time it is first used or installed ready for use. The ATO calls this a decline in value deduction.
2. A software development pool
If the cost is for developing software, you can choose to put it in a software development pool and deduct it under the pool rules instead. The ATO says website expenditure allocated to a pool has an effective life of 5 years if incurred on or after 1 July 2015.
3. The instant asset write-off for small businesses
If you're eligible, the ATO says you can claim an immediate deduction for the cost of acquiring or developing a website. For the 2026-27 income year (1 July 2026 to 30 June 2027), this is how the ATO describes it:
- Who: small businesses with an aggregated turnover of less than $10 million that choose to use the simplified depreciation rules.
- What: the business portion of an eligible asset that costs less than $20,000, claimed in the year it is first used or installed ready for use.
- How long: the ATO says the $20,000 limit is permanent from 1 July 2026, and that this measure is now law.
- Per asset: the limit applies to each asset, so you can write off more than one.
- Above the limit: assets costing $20,000 or more go into the small business pool, deducted at 15% in the first year and 30% each year after.
Two conditions are easy to miss. The ruling says the immediate deduction applies to in-house software only if you haven't put that expenditure in a software development pool. And if you choose simplified depreciation, the ATO says you must apply the whole set of rules to all your eligible assets, not just the write-off. That choice is a good one to make with your accountant. For a sense of what a website build typically costs, see our guide to how much a website costs in Australia.
GST credits, records and what to ask your accountant
If your business is registered for GST, you can usually claim a GST credit on your business activity statement for the GST included in website costs. The ATO's conditions are that the purchase is for your business, the price included GST, you paid or must pay for it, and you have a tax invoice for purchases over $82.50 including GST.
You can't claim the same GST twice. The ATO says that if you can claim a GST credit, your income tax deduction is the cost less that credit. For a depreciating asset, the cost you depreciate is also reduced by the GST credit. If you're not registered for GST, you claim the full cost including GST.
Records to keep
- Tax invoices for the build, hosting, domain renewals and any paid changes.
- A scope or quote showing what was built or changed, so capital and revenue work can be told apart.
- The go-live date of a new site or major upgrade.
- Your web designer's ABN and GST status, which you can check on ABN Lookup.
Questions for your accountant
- Is our new website or rebuild capital, and which deduction method suits us?
- Are we eligible for the instant asset write-off, and do we use the simplified depreciation rules?
- Should any of this year's website work be split between capital and revenue?
- Are there costs from before the business started that need different treatment?
Again, this guide is general information based on ATO publications, not tax advice. Your accountant or a registered tax agent can apply the rules to your business.
Key takeaways
- (01)
Most business website costs are deductible, but the ATO treats building a site as capital and running it as a revenue expense.
- (02)
Hosting, domain renewals, maintenance and content updates are generally claimed in the year you pay for them.
- (03)
A new site or major upgrade is in-house software: deducted over 5 years, through a software development pool, or written off immediately by eligible small businesses.
- (04)
For 2026-27, eligible small businesses with turnover under $10 million can write off assets costing less than $20,000. Check with your accountant before you claim.
Frequently asked questions
Is website hosting tax deductible in Australia?
Yes, for a business website. The ATO treats periodic web hosting fees as a revenue expense, deductible over the period they relate to, and lists server hosting among the ongoing website costs you claim in the year they occur. If you're registered for GST, claim the GST as a credit and deduct the rest.
Is website development tax deductible in Australia?
Yes, but not all at once under the normal rules. The ATO says acquiring or developing a business website is capital expenditure. It's usually treated as in-house software and deducted over 5 years, through a software development pool, or immediately if your small business is eligible for the instant asset write-off.
Can I use the instant asset write-off for a new website?
The ATO says eligible businesses can claim an immediate deduction for acquiring or developing a website. For 2026-27 that means a small business with aggregated turnover under $10 million, using the simplified depreciation rules, for an asset costing less than $20,000. Ask your accountant to confirm you're eligible.
Is a website redesign a capital or revenue expense?
It depends on the size of the change. The ATO treats a new site, a replacement of a material part or significant new functionality as capital. Maintenance, minor enhancements and making an existing site display properly on phones are revenue expenses you can generally claim straight away.
More answers on price, hosting and timing in our FAQ.