Can I Claim Software Subscriptions as a Business Expense in Australia?
Yes, SaaS subscriptions used in the business are fully deductible against company income in the year incurred. Perpetual software licences over the depreciation threshold are capitalised and depreciated over 4 years.
Finn does your books in Australia
AccountsOS keeps the books for Australia businesses, tracks tax deadlines and handles expenses, in plain English. Ask Finn about yours, no signup needed.
What Australian Taxation Office (ATO) says
Software subscription fees are revenue expenditure deductible under s8-1 ITAA 1997. In-house software developed or purchased outright is depreciated over 5 years (4 years for assets first used in 2015–16+) under Division 40 Subdivision 40-E. A small business with aggregated turnover under A$10 million can write off the business portion of software costing less than A$20,000 under the instant asset write-off. A GST-registered business can claim a GST credit on a creditable subscription. For software bought from overseas, the reverse charge may apply when the business is not entitled to a full credit. The ATO expects the software to be used for the business purpose in the same period as the cost is claimed, so annual plans that cover several years may need to be spread out. The GST credit follows the tax invoice rules and the business should hold the invoice before lodging the BAS.
When you can claim
- Monthly/annual SaaS (Xero, Slack, Notion, Adobe Creative Cloud)
- Domain names, hosting, cloud storage
- Stock photography subscriptions
- Mobile app subscriptions used for business
- Online payment, payroll and project tools used day to day by the business
When you cannot claim
- Personal subscriptions without business use
- Mixed-use subscriptions without apportionment
- Software licences over instant asset write-off threshold (capitalise)
- The private portion of a tool that is shared with the family
- The cost of software used to earn exempt income or for a hobby
Good to know
Pro tip: Review recurring subscriptions every quarter against the bank feed. Cancel unused licences and keep every tax invoice, because a GST credit needs one for any purchase over A$82.50.
Important: Software developed by the business for its own use is depreciated over five years, and the R&D tax incentive may apply if the work is genuinely experimental. The two treatments should not be mixed, so talk to the tax agent before claiming.
Stop guessing what you can claim in Australia
AccountsOS automatically categorises expenses with Australian Taxation Office (ATO)-aware rules and tells you exactly what is claimable.
Try Free