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If you made a prepayment of $1,000 or more for something to be done (in whole or in part) in a future income year, the timing of your deduction may be affected by the rules relating to prepayments. Generally, you will need to apportion your deduction for prepaid business expenditure over the service period or 10 years, whichever is less. There are some exceptions under the 12-month rule for STS taxpayers and the special rules relating to plantation forestry managed agreements. For more information, see the publication Deductions for prepaid expenses 2005-06 (NAT 4170-6.2006).
Where expense labels at item P8 include prepaid expenses that differ from the amounts allowable as deductions in the 2005-06 income year, make an expense reconciliation adjustment at H item P8.
Last modified: 01 Sep 2006QC 18499