Private ruling: Deductions
Date of advice: 21 June 2022
Published: September 2022
Ruling period: year ending 30 June 20XX | year ending 30 June 20XX
Date scheme commenced: 18 April 20XX

Ruling: Q1: Are you entitled to an immediate deduction under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the costs you incurred to purchase work-related computer programs? | A1: Yes. Your computer program expenses are deductible as section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

Relevant facts and circumstances: You are employed as the manager for XXXX. As part of your appointed duties, you are required to be a responsible manager with ASIC. As an ASIC responsible manager your responsibilities include the compliance of XXXX's policies, procedures and documentation. Where there is legislative or policy changes you need to implement and manage changes to computer systems which are administered by an independent computer company (XYXY), for the system to be compliant for your dealers and customers to access. If the systems do not have the necessary changes and amendments, XXXX is not compliant and cannot trade or conduct business. On XXX you personally paid $XX for computer program amendments. The computer program is maintained and amended by XYXY at your advice. It does not have a used by date or expiry date. The program is amended whenever there are ASIC or APRA or legal change requirements to loan contracts or information. There is no annual expense, just a development cost each time changes are required. In terms of development and modification, the computer program may be required to be updated three or four times per year. Your employer requires you to have these computer programs as part of your role. Your employer has not reimbursed you for these expenses as times have been difficult and the effects of COVID has had a major impact on the business.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997