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There is a limit on the amount eligible for transitional treatment. This limit is referred to as the cap. The cap is the total of all your later year amounts subject to the transitional rules in the year of income including 21 September 1999. Any prepayments you made which were subject to the tax shelter rules are not included in determining the amount of the cap.
If your later year amount for prepaid expenditure incurred in the 2002 income year exceeds your cap, the later year amount subject to the transitional rules in that year will be limited to the amount of that cap. The amount by which your 2002 later year amount exceeds this cap is allowed as a deduction proportionately over the eligible service period that occurs after the expenditure year.
Last modified: 18 Jun 2002QC 27429