Use the following formula to work out your deduction for prepaid expenditure that is affected by the tax shelter rules:
Expenditure × (number of days of eligible service period in the year of income ÷ total number of days of eligible service period)
If the prepayment shown as an expense at item P8 on your schedule differs from the deductible amount for 2000-01 worked out using the above formula, ensure that you make an expense reconciliation adjustment at H item P8 on your schedule. If the prepayment relates to a partnership or trust distribution at item 12 on your tax return, ensure that the deduction claimed at X or Y item 12 on your tax return is the amount worked out using the above formula.
If you made a tax shelter prepayment in the 1999-2000 income year and you did not claim a deduction for all of the expenditure because some of the eligible service period is within the 2000-01 income year, use the above formula to work out the amount of your deduction for the 2000-01 income year. Show the amount as a subtraction at H Expense reconciliation adjustments, item P8 on your schedule if the prepayment relates to your business income at P8. If the prepayment relates to a partnership or trust distribution at item 12 on your tax return, ensure that the amount is shown as a deduction at X or Y item 12.
This publication is for individuals who have prepaid a deductible expense for something which is to be done within 13 months. NAT 4170-6.2001.