• Summary of rules including the 12-month rule

    Attention

    Warning:

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

    End of attention
    • Prepaid expenditure that is subject to the tax shelter rules is apportioned over the eligible service period or 10 years, whichever is less. For more information, see chapter 2.
    • However, certain prepaid expenditure incurred under a plantation forestry managed agreement is deductible under the 12-month rule where:
      • the eligible service period for the expenditure is 12 months or less
      • the 12-month period ends on or before the last day of the income year following the year in which the payment was incurred.
       

    For more information, see chapter 3.

    • Prepaid expenditure incurred by an STS taxpayer is immediately deductible under the 12-month rule where:
      • the eligible service period for the expenditure is 12 months or less
      • the 12-month period ends no later than the last day of the income year following the year in which the payment was made. This 12-month rule applies to both deductible business and deductible non-business expenditure made by an STS taxpayer. It applies to years of income commencing after 30 June 2001.
       
    • A deduction for prepaid expenditure incurred by an STS taxpayer, whether incurred in carrying on a business or not, is apportioned over the eligible service period or 10 years, whichever is less, where the eligible service period is more than 12 months or it ends after the last day of the income year following the year in which the payment was made.

    Note

    For an STS taxpayer, the expenditure must have been paid before a deduction can be claimed.

    Last modified: 18 Jun 2002QC 27429