Budget ’08: Where’s the focus on ICT?

The Australian Computer Society (ACS) said the Government, as part of its current investment strategy needs to recognise the ICT sector as a major area of future growth, and a powerful economic sector in its own right.

According to the ACS, it has welcomed the level of investment in Australia’s communications infrastructure, education and innovation initiatives outlined in the 2008-09 budget and called on the Government to increase efforts to develop a national ICT strategy that will enable greater focus on the sector.

“The ACS renews its call for an agreed national ICT strategy. Technology was previously identified by the Rudd Government as the toolbox of the economy and as driving innovation and productivity.

"Beyond funding, there needs to be a way of centralising the focus on the sector, and creating accountability for spending and outcomes," said ACS national president, Kumar Parakala.

He said, the export focus goes some way to meeting previous calls by the ACS to promote the Technology Australia brand, however without a national ICT strategy, this opportunity may be lost.

According to Parakala, Australia must develop specific policies to leverage this massive infrastructure investment in broadband.

“This means focusing on the Digital Economy and what’s beyond the pipe - particularly in e-commerce, e-health and education areas. To do this, we need a deliberate and focused strategy to give the Digital Economy priority, as many of our neighbours have done with enormous economic success,” he said.

Meanwhile, John Brazzale, partner with accounting firm Pitcher Partners, said restricting concessions under the Fringe Benefits Tax (FBT) regime means employees can no longer salary package laptops and pass them onto their child for use at school and at home for their studies.

According to Brazzale, the measure is somewhat inconsistent with other Federal Budget initiatives to provide tax refunds for certain education costs, including the purchase of laptops, said Brazzale.

“The Federal Government measures aimed at restricting FBT concessions include tightening the exemption for certain work-related items such as laptop computers and personal digital assistants.

"For items purchased after 7.30pm on 13 May 2008, an exemption from FBT will only apply for items used primarily for work purposes. The ability for employees to claim depreciation on such FBT exempt items will be removed,” he said.

Brazzale added it isn't an attack on a flexible workplace as the exemption now has a test to prove the item must be 'used primarily for work purposes.' He said there is still the ability to encourage flexible working arrangements.

“One negative of the change is the fact that the concept of a 'used primarily for work purposes' test is a subjective one and one for which there is no clear guidance,” he said.

According to Brazzale, in an environment where Governments are supposedly trying to reduce the compliance and administration burden of taxes on business it is disappointing that the proposed amendment is going to cause more administration for businesses.

He claimed the period over which in-house computer software is depreciated will increase from 2.5 years to 4 years for expenditure incurred after 13 May 2008, with the straight line basis of depreciation the only method of depreciation allowable for in-house computer software.


“In many cases, businesses will, by the necessity of technological change, replace its software after 2.5 years in which case it will merely write off the balance of the software's cost. The only impact will be slightly lower tax deductions in the earlier years,” he said.

Brazzale said the proposal is unlikely to impact when or how a business acquires new software, adding that businesses purchase software based on commercial and operational imperatives, not tax considerations.

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