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The prepayment rules for non-business expenditure differ depending on whether you are an individual taxpayer or a non-individual taxpayer such as a company or trust.
If you are not an individual-for example, a company, superannuation fund or a trust-calculate the deduction for prepaid non-business expenditure in the same manner as your deduction for prepaid business expenditure as explained in chapter 6.
However, if you are an individual, you are entitled to an immediate deduction for prepaid non-business expenditure where the payment is incurred for a period of service not exceeding 12 months and the eligible service period ends on or before the last day of the next year of income. Where the eligible service period is more than 12 months or ends after the next year of income, your deduction for the expenditure must be apportioned over the eligible service period or 10 years, whichever is less. Transitional rules do not apply in these circumstances. For more information, chapter 4.
Last modified: 18 Jun 2002QC 27429