You capitalize website development costs during the application development stage, which includes designing the site's features, obtaining and developing graphics, coding, installing software, and testing functionality. This is when you're building something that will generate value for years, not just months. The CRA and IFRS guidance divides web development into three phases. The preliminary project stage—planning, evaluating alternatives, selecting vendors—gets expensed immediately because you haven't committed to building anything yet. The application and infrastructure development stage is where capitalization happens, covering actual construction costs like developer wages, software licenses for production tools, and third-party integration fees. The operating stage—hosting, content updates, minor tweaks—goes back to being expensed as incurred. The threshold question is whether the website generates revenue or provides measurable economic benefits extending beyond 12 months. An e-commerce platform that processes transactions for five years qualifies. A basic brochure site you'll redesign in 18 months sits in a gray zone and often gets expensed to avoid audit headaches. At Ottawa SEO, we see clients capitalize builds in the CAD 25,000 to 150,000 range when the site is core infrastructure, while sub-CAD 10,000 projects typically get expensed for simplicity. Capitalized costs get amortized over the asset's useful life, usually 3 to 5 years for websites given how fast design standards and technology evolve. Shorter if you're in a fast-moving industry, longer if it's a stable enterprise platform. Keep detailed invoices separating capitalizable work from expensable items—your developer's bill might include both new feature builds (capitalize) and monthly content updates (expense). One mistake companies make is capitalizing redesign costs when the old site still functions. If you're replacing existing functionality without adding material new capabilities, the CRA may argue it's maintenance. Document how the new build extends functionality or revenue potential to support capitalization treatment.