Understanding website functionality: why your clients care

In 2025, websites are rarely “just websites”. Many now incorporate SaaS tools, cloud hosting, PaaS functions, third-party APIs, and plug-ins that behave like software. These features can shift the accounting treatment of website spend, and open the door to capitalisation under AASB 138 Intangible Assets.

While AASB 138 is relatively straightforward, understanding your client’s tech can be complex. But with a grasp on the functionality and business purpose behind a website, you can assist clients planning to invest in new digital infrastructure – since they probably don’t realise they may not have to expense the entire thing.

Staying up to date with the tax implications of modern website features helps you advise clients so they get a better profit in the short term. It comes down to knowing which website types and components have to be expensed when incurred, and which can be capitalised under AASB 138.

The strategic role of a website

You already know the rule of thumb: marketing-based websites (like blogs or brochure sites) have to be expensed, while revenue-generating sites may be amortised under AASB 138.

However, there are grey areas within the two categories. Understanding the nuances of a client’s website is where accountants add value.

AASB 138 requires that an intangible asset is identifiable (separate from the company), non-monetary (so it can’t be valued in dollars), controlled by the business, and likely to generate economic benefits.

Many websites (or components of them) now meet these criteria. This includes e-commerce sites, subscription or membership platforms (such as SaaS products or online learning platforms), and custom-built operational systems that replace staff or reduce admin (like client portals, automated quotation systems or online appointment systems).

In accounting, websites are categorised by functionality rather than design. Make the former your focus when planning digital upgrades with clients.

However, a whole-of-site-based approach is no longer the most effective route. Accountants should examine sites in more detail, as different website components can play their own part in tax return strategy.

The composition of costs

Often, whole websites can’t be lumped into either the “expense” or “intangible asset” category.

Modern sites are a mix of things, from promotional content to integrations and automated processes. The real accounting skill lies in separating parts of the website.

For example, costs like web hosting, content creation and maintenance are usually classed as expenses, while custom development, added functionality, software, and integrations are potential for capitalisation.

Breaking things down in this way allows clients to plan digital upgrades more efficiently and in a way they probably hadn’t considered.

A practical example

A client invests $60,000 in redeveloping their website. Initially, they assume the full amount must be expensed.

A breakdown shows:

• $15,000 covers design and content (expense)

• $10,000 covers hosting and licenses (expense)

• $35,000 goes on a new client portal that automates onboarding and reduces staff hours (capitalisable)

Instead of taking a $60,000 hit to profit, the client can amortise $35,000 over time.

The impact on your clients

Most clients don’t realise their complicated websites could actually benefit their bottom line, company valuation, investor confidence, and tax return. They don’t know how to track development costs or which components deliver future economic benefits.

You can help them understand what can be separated and measured under AASB 138, so certain websites – or website components – can be capitalised rather than expensed as incurred. In other words, accountants who understand digital tech can improve short-term profit reporting, planning, and budgeting for clients.

This capability is what sets you apart.