Prepaid expenses

If you prepay a rental property expense -such as insurance or interest on money borrowed -that covers a period of 12 months or less AND the period ends on or before 30 June 2004, you can claim an immediate deduction. A prepayment that doesn't meet these criteria and is $1,000 or more may have to be spread over two or more years. This is also the case if you carry on your rental activity as a business and have not elected to be taxed under the simplified tax system for small businesses. For more information see the publication Deductions for prepaid expenses.