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  • Summary of rules



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    • Certain prepaid expenditure incurred under a plantation forestry managed agreement is subject to a 12-month rule. For more information, see chapter 3.
    • If you invest in a tax shelter arrangement, you need to be aware that the tax shelter rules for prepayments may apply to limit your immediate deductions. The tax shelter rules apply in the same way to all taxpayers.
    • If you prepaid expenditure under a tax shelter agreement for a thing that will not be wholly done within the expenditure year and it is not covered by one of the exceptions listed above, you cannot deduct all of the expenditure in the income year in which it was incurred. The deduction must be apportioned over the eligible service period or 10 years, whichever is less.
    • An agreement in respect of a tax shelter arrangement is one that covers any activities that relate to the arrangement, including those that give rise to deductions or assessable income. For example, if you invest in a tax shelter arrangement and prepay interest on a loan from a 3rd party to pay management fees for the tax shelter, the prepaid interest on the loan would also be subject to the tax shelter rules.
    Last modified: 10 Dec 2019QC 27429