These prepayment rules only apply to expenditure which would otherwise qualify for immediate deduction under the general deduction provisions or, for eligible companies, under the relevant research and development provisions.
The general deduction provisions allow you to deduct from your assessable income any expense incurred in the course of earning your assessable income.
Expenditure of a capital, private or domestic nature, or expenditure incurred in gaining exempt income, is specifically excluded from being deductible under the general deduction provisions.
The prepayment rules do not apply if the expenditure is deductible under a specific deduction provision of the tax law, other than those for research and development referred to below.
Unless specifically stated otherwise, the terms 'expense' and 'expenditure' used throughout this fact sheet refer to expenditure that is only allowable as a deduction under the general deduction provisions of section 8-1 of the Income Tax Assessment Act 1997 or, for eligible companies, under the research and development provisions in sections 73B, 73BA, 73BH, 73QA, 73QB or former section 73Y of the Income Tax Assessment Act 1936.
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