The new Federal Government is sending mixed messages about our computer industry and how development of our IT skills should be funded.

On the one hand, computer programming skills will give priority to potential migrants but claims for software expenditure are deferred by almost double.

Write-offs for tax depreciation purposes have been extended from two and a half to four years.  Any newly held software assets after 13 May 2008 including in-house software that a taxpayer develops or holds in some way can be written off for tax purposes only over four years. 

An upgrade to old software, provided it does not create a new or different depreciating asset, will not be affected.  We can see that all taxpayers will struggle with this concept - What is old?  What is new?  What is an upgrade?  What is a depreciating (intangible) asset?  How will anybody understand or know what to do?

Hopefully the Australian Taxation Office will give guidance in due course