Should website costs be capitalised?

Should website costs be capitalised?Website costs should be capitalized if they create a distinct asset expected to generate future economic benefits, such as custom development or functionality that extends beyond one year. Per CRA and IFRS rules, internal development costs in the application phase are typically capitalized, while planning and post-launch content costs are expensed.AnswerWhether you capitalize or expense website costs depends on what you're building and how your accountant interprets CAS 3064 (for private companies) or IAS 38 (for public). The short version: if the site creates a measurable asset with multi-year benefits, you capitalize the development phase. If it's routine maintenance or content updates, you expense it immediately.CRA and most Canadian accountants treat website projects in stages. Planning and research costs are expensed. Application development costs—custom coding, database architecture, e-commerce integration—are capitalized as an intangible asset and amortized over the useful life, usually two to five years. Post-launch costs like content creation, minor updates, and hosting are expensed as incurred. A $40,000 custom platform build gets capitalized; a $6,000 WordPress theme setup is often expensed outright because the useful life is short and the amount immaterial.Key factors that favor capitalization:- The site generates revenue directly (e-commerce, SaaS, lead-gen) - Custom development with proprietary code or integrations - Expected useful life exceeds 12 months - Cost exceeds your company's capitalization threshold (often $5,000–$10,000)Gray areas include third-party template customization and design costs. Some accountants expense design as a service cost; others capitalize it if it's integral to a larger development project. At Ottawa SEO, we tell clients to loop in their accountant early if the project is over $15,000. We've seen $80,000 platforms capitalized and amortized over four years, while a $22,000 rebuild for a service business was expensed entirely because the owner wanted the write-off and the accountant judged the useful life uncertain.One practical issue: capitalizing means you defer the tax deduction, so some small businesses prefer to expense everything permissible to maximize current-year deductions. That's a tax-planning call, not an accounting-standards call. The technical answer is that development-phase costs meeting the asset criteria should be capitalized, but materiality and professional judgment leave room for interpretation.