Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Following the introduction of the Bill into Parliament, the Government has received representations that there may be a small number of cases where taxpayers may not be able to obtain a deduction under any provision of the law, including new Division 46 , for expenditure on software.
Generally, the Taxation Laws Amendment (Software Depreciation) Bill 1999 ensures that expenditure on software would only be covered by new Division 46 where the expenditure is principally for a taxpayer to use the software to perform the functions for which the software is acquired or developed. The Bill specifically excludes expenditure on software which is trading stock and expenditure which receives a more favourable treatment under another capital allowance provision of the law.
The amendments being moved on behalf of the Government will ensure that all expenditure on software will be deductible, either within new Division 46 or elsewhere in the tax law.
Financial and compliance cost impact: Remains unchanged from costs provided in the explanatory memorandum to the Taxation Laws Amendment (Software Depreciation) Bill 1999.