Can you write off your website? A guide for Canadian businesses

If you run a business in Canada and you pay to have a website designed, built, hosted, and maintained, those costs are deductible against your business income. That part is not controversial. What takes a little more care is the timing: some website costs come off your income in the year you pay them, and some are treated as a capital asset and deducted over time through capital cost allowance. Knowing which is which, before the invoice is written, is worth real money.

Current expense or capital: the question the CRA asks

The Canada Revenue Agency's guidance on software and website development costs is short and clear on the principle. Such costs are either current, and deductible in the year they are incurred, or capital, and deductible under the capital cost allowance rules. Whether a particular website cost is current or capital is, in the CRA's words, always a question of fact.

The fact that matters most is durability. Software, including a website, is considered depreciable when it is of an enduring nature, which the CRA describes as a useful life anticipated to be beyond one year. A site built to serve the business for years is a capital asset. A landing page for a three-week campaign is not.

In a technical interpretation on website costs, the CRA put the same idea from the other direction: where a website will only have a relatively short useful life, the related costs should be treated as a current expense, and where it is expected to have a long useful life, they should be treated as capital. It also noted that a single website project can contain both kinds of cost, so the components have to be looked at separately rather than the invoice as a whole.

What is usually a current expense

These are the costs that come off your income in the year you pay them, the same way rent or advertising does. Their common feature is that they buy something used up within the year rather than an asset that lasts.

• Hosting, domain name renewals, SSL certificates, and similar recurring fees.
• Maintenance and support retainers, including security updates and small fixes.
• Routine content updates: new photographs, revised copy, a new service added to an existing page.
• Online advertising, paid search, and the design of short-lived campaign assets.
• Search engine optimisation work carried out as an ongoing service rather than as part of building the site.

What is usually capital: Class 12

When the website is a lasting asset, the CRA's position is that the cost of developing it is capital, and the part that is software goes into Class 12. The technical interpretation is specific about what that includes: application software bought from third parties to build the site, and the labour costs of designing and developing the software that carries out the website's functions. In practice, for a site built by a studio, that is most of the build invoice.

Class 12 has a capital cost allowance rate of one hundred percent. On its own, that would let you deduct the whole cost in the first year, but Class 12 software is normally subject to the half-year rule, which limits the first-year claim to half and pushes the rest into the following year. Which is where the timing rules come in.

Two further details are worth knowing. The CRA's interpretation allowed that some components of a website's development cost might not be depreciable property at all and could instead be a capital expenditure of the kind now handled through Class 14.1, which is deducted far more slowly. And the CRA's long-standing administrative practice is that where only a minor part of an expenditure is capital, the whole amount can be treated as current. Both are reasons to have the invoice itemised, which we come back to below.

The reinstated Accelerated Investment Incentive

Budget 2025 reinstated the Accelerated Investment Incentive, and the measure became law when Bill C-15, the Budget Implementation Act, received Royal Assent on March 26, 2026. It applies to most new depreciable property acquired after 2024, and for property that becomes available for use before 2030 it suspends the half-year rule and enhances the first-year allowance.

For a Class 12 website, the practical effect is that the half-year rule no longer holds back half of the claim: the full cost can be deducted in the year the site becomes available for use. The enhancement steps down for property that becomes available for use from 2030 to 2033, and normal rules resume after that. Because the exact figures depend on the year and on the class, confirm the current schedule with your accountant when you plan the project.

The earlier temporary measure that allowed Canadian-controlled private corporations to immediately expense up to one and a half million dollars of eligible property has ended; it applied to property that became available for use before 2024 for corporations, and before 2025 for individuals and partnerships. If you read older articles that cite it, that is why the numbers look different.

Timing: available for use

Capital cost allowance is claimed from the year the asset becomes available for use, not the year you sign the contract or pay the deposit. For a website, that is normally the year it goes live. A project that starts in October and launches in February deducts its capital portion in the second year. A project that launches in December deducts it in the first.

This is not a reason to rush a launch. It is a reason to plan one. If a site is going to be built anyway, and your accountant confirms the treatment, choosing the launch date with the tax year in mind is a legitimate decision, and we are happy to schedule around it.

GST and HST

If your business is registered for GST/HST, the tax charged on a website invoice from a Canadian supplier is generally recoverable as an input tax credit, whether the underlying cost is current or capital. It is a separate question from income tax and it is easy to forget when budgeting.

What to ask your accountant

1. Which parts of this project are current expenses and which are capital? Ask before the project starts, not at year end.
2. For the capital portion, does Class 12 apply, and does the reinstated Accelerated Investment Incentive let us deduct it in full in the year of launch?
3. Is any part of the invoice better treated as Class 14.1, and if so, can it be separated from the software work?
4. Does the timing of the launch change which year the deduction lands in, and does that matter to us?
5. Are we registered for GST/HST, and are we recovering the tax on the invoice?

How we make this easier

The single most useful thing a studio can do for your accountant is to write a clear invoice. Ours separate the build from the ongoing work: design and development on one side, hosting, care, and content updates on the other, with line items labelled for what they actually are. If your accountant asks for a particular breakdown, we will provide it. It costs us nothing and it can save you a conversation with the CRA. The build itself is scoped on our pricing page, and ongoing care is priced separately for the same reason.

Sources

• CRA — E-commerce: software and website development costs
• CRA technical interpretation 2013-0507121E5 — Website costs
• CRA — Capital cost allowance classes
• CRA — Accelerated Investment Incentive
• EY — Canada tables bill with accelerated capital cost allowance measures (Bill C-15)
• EY — Canada's 2025 budget implementation bill no. 1 receives Royal Assent
• BDO — Immediate expensing of depreciable property (the expired $1.5M measure)