Income Tax Assessment Act 1997
You can deduct a * work in progress amount that you pay for the income year in which you pay it to the extent that, as at the end of that income year:
(a) a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related; or
(b) you reasonably expect a recoverable debt to arise in respect of the completion or partial completion of that work within the period of 12 months after the amount was paid. 25-95(2)
You can deduct the remainder (if any) of the * work in progress amount for the following income year. 25-95(3)
An amount is a work in progress amount to the extent that:
(a) an entity agrees to pay the amount to another entity (the recipient ); and
(b) the amount can be identified as being in respect of work (but not goods) that has been partially performed by the recipient for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work. 25-95(4)
An amount does not stop being a work in progress amount merely because it is paid after a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related.
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