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  • Chapter 1-General information about prepaid expenses



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

    End of attention

    What is a prepaid expense?

    A prepaid expense is expenditure you incur for things to be done (in whole or in part) in a later income year. If expenditure is incurred for something to be done in full within the same income year, it is not a prepaid expense to which the prepayment rules apply.

    Example: Expenditure not constituting a prepayment

    Jasmin is a solicitor. On 1 July 2001, she paid $1,500 annual subscription for the monthly provision of a professional journal. The subscription covers the period 1 July 2001 to 30 June 2002. Because the thing to be done under the agreement-the provision of the professional publication-will be completed wholly within the expenditure year the prepayment rules will not apply.

    End of example
    Last modified: 10 Dec 2019QC 27429