• What is the eligible service period?

    This is the period during which the service is to be done under the agreement in return for the expenditure.

    The eligible service period begins on the later of either:

    • the day on which the service starts to be done, or
    • the day the expenditure is incurred

    and ends on the earlier of either:

    • the last day on which the service ceases to be done, or
    • 10 years.

    Example: eligible service period

    XYZ Ltd operates a printing business from leased premises. On 1 December 2007 XYZ Ltd made a lease payment to cover the period 1 December 2007 to 30 November 2008. Therefore, the eligible service period for this expenditure commences on 1 December 2007 and ends on 30 November 2008, a period of 366 days.

    XYZ Ltd's income year ends on 30 June of each year. As the service to be done under the agreement (the provision of premises by the lessor) is not wholly done within the expenditure year the prepayment rules will apply.

    Example: eligible service period

    XYZ Ltd operates a printing business from leased premises. On 1 December 2007 XYZ Ltd made a lease payment to cover the period 1 December 2007 to 30 November 2008. Therefore, the eligible service period for this expenditure commences on 1 December 2007 and ends on 30 November 2008, a period of 366 days.

    XYZ Ltd's income year ends on 30 June of each year. As the service to be done under the agreement (the provision of premises by the lessor) is not wholly done within the expenditure year the prepayment rules will apply.

      Last modified: 25 Jun 2008QC 16667