A website can be an intangible asset, but the purpose of the site and the applicable accounting rules matter. A large development invoice, a custom codebase or the expectation of more enquiries does not, by itself, establish that the full cost belongs on the balance sheet.
This guide explains the questions to raise when preparing a website project for accounting review. It addresses full IFRS at a high level; your accountant should confirm which reporting framework applies to your business and how it applies to the particular expenditure.
What IAS 38 says about recognition
Under IAS 38, an intangible item must meet the asset definition and recognition requirements, including probable future economic benefits and reliable cost measurement. Research expenditure is expensed. Development expenditure qualifies for recognition only when the specified criteria are met. IFRS Foundation: IAS 38.
The practical question is therefore not simply whether a developer wrote code. Give your accountant the contract, project purpose and cost breakdown so they can assess what was created and what your business controls.
The important exception for promotional websites
SIC-32 addresses website costs specifically. The IFRS Foundation states that expenditure on developing a website solely or primarily to promote and advertise the business's own products and services is recognised as an expense when incurred. Other websites still need to satisfy IAS 38 and demonstrate probable future economic benefits before recognition. IFRS Foundation: SIC-32.
Do not assume a lead-generation brochure qualifies merely because leads could produce revenue. For a transactional platform or customer portal, describe its actual functions and ask for an assessment; the label on the project is not an accounting conclusion.
Can website design costs be capitalised?
Potentially, where the applicable recognition criteria are met. Do not apply one treatment to a mixed invoice without reviewing its components.
For the project handover, a useful breakdown is:
| Cost description | Records to supply |
|---|---|
| Discovery and feasibility | Research brief, options considered and dates |
| Design and development | Agreed functions, milestones and itemised work |
| Content production | Purpose of the content and deliverables |
| Software or hosting subscriptions | Supplier agreement and service period |
| Ongoing support or changes | Work performed and whether it maintains or changes functionality |
This table is a record-preparation aid, not a rule that assigns a tax or accounting treatment to each row. Ask the supplier for a meaningful breakdown before approving the final invoice.
What happens after an asset is recognised?
IAS 38 distinguishes assets with finite and indefinite useful lives. Finite-life intangible assets are amortised and are subject to impairment requirements. The estimate must reflect the asset; do not adopt an automatic two-to-five-year website rule without an assessment. IFRS Foundation: IAS 38.
Keep acceptance dates, maintenance obligations and planned replacement information with the project records. They help the finance team understand what the business expects to use and for how long.
Accounting treatment and tax treatment are separate
Capitalising or expensing a website for financial reporting does not settle the South African tax deduction. SARS's company-return guidance includes adjustments to accounting results when calculating taxable income. SARS: ITR14 guide.
For that separate question, see website design and South African tax. Have your accountant approve the treatment before filing.
Prepare the scope before the build
When commissioning a business website, separate the initial build from ongoing services, identify ownership and licence terms, and record changes to scope. Those details help with budgeting and handover as well as the accountant's review. Symaxx can describe the web work supplied; the business's adviser determines its accounting and tax treatment.