I mean you might considered a loaded gun to be a gun with bullets in it but by most laws if you hold the bullets in the left hand and the gun in the right hand that's a loaded gun. The law needent be consistent with common understanding.
So, in lets say 2023 your business brings in $1.2M of revenue from a pure-software product. Your net cashflow is $0.2M because you paid $1M to the dev team. Come tax time you have to report a revenue of $1.2M and the maximum allowed expenses are $0.2M so you have to pay taxes on that $1M of profit.
The reason the maximum allow expenses are $0.2M is because Software is considered R&D now so the expenses towards it (the $1M in salary) _must_ be amortized over 5 years. So if next year you also had $1.2M of revenue and $1M of salaries you'd be paying profit on $1.2 - 2 * ($0.2M) since there's two years of salaries be amortized now.
darth_avocado
Well that’s stupid. Shouldn’t eng salaries be part of opex?
So, in lets say 2023 your business brings in $1.2M of revenue from a pure-software product. Your net cashflow is $0.2M because you paid $1M to the dev team. Come tax time you have to report a revenue of $1.2M and the maximum allowed expenses are $0.2M so you have to pay taxes on that $1M of profit.
The reason the maximum allow expenses are $0.2M is because Software is considered R&D now so the expenses towards it (the $1M in salary) _must_ be amortized over 5 years. So if next year you also had $1.2M of revenue and $1M of salaries you'd be paying profit on $1.2 - 2 * ($0.2M) since there's two years of salaries be amortized now.