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  • What is excluded expenditure?



    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 types of expenditure are excluded from the prepayment rules. These are:

    • amounts of less than $1,000
    • amounts required to be paid by a Commonwealth, State or Territory law or by a court order
    • payments of salary or wages (under a contract of service)
    • amounts that are capital, private or domestic in nature.

    Example: Amount required to be paid under a State law

    John operates a cartage business and paid $1,200 on 31 December 2001 to register his truck for 12 months from 1 January 2002 to 31 December 2002. The truck is used exclusively for business purposes. Although the registration fee is in excess of $1,000 and it covers a period spreading across more than one income year, it is excluded expenditure. This is because the registration fee is required to be paid under a State or Territory law. The prepayment rules do not apply to this type of expenditure and the fee is deductible in the year it is paid.

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    Last modified: 10 Dec 2019QC 27429