Software vendors to ride out tax changes, MYOB says

Budget changes to reduce the tax effectiveness of software purchases are unlikely have a big impact on business purchasing decisions, a key industry player says.

On Tuesday Treasurer Wayne Swan announced that businesses are now required to depreciate software purchases over four years, instead of the previous 2.5 year period, to achieve a saving of $1.3 billion over the forward estimates.

But one of Australia’s largest business software providors, MYOB, says it does not believe the change will have any impact on purchases of its accounting software products.

“The demand for our software will not change simply because of a change in tax treatment,” an MYOB spokesman says.

MYOB also argues that any business with a turnover below $2 million can claim an immediate reduction for assets valued below $1000 if they operate under the Simplified Tax System.

Sharon Burke, a tax partner with PKF Enterprise Advisors, says while the depreciation change will mean businesses must now wait longer to write off the cost of software, it is unlikely to change purchasing intentions.

“I don’t think it will affect purchasing – it’s a business decision and the tax deduction wasn’t the real driver, so it’s more about whether a business believes they can increase productivity by upgrading software,” Burke says.