Taxpayers carrying on a business incurring deductible business expenditure

If you are a small business entity, see Small business entities.

Summary of rules

• If you are carrying on a business and are not a small business entity, you must apportion your deduction for prepaid business expenditure over the eligible service period or 10 years, whichever is less.
  
• 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 Investments in tax shelter arrangements.
  
• If you are not an individual or a small business entity, your deduction for prepaid non-business expenditure is apportioned over the eligible service period or 10 years, whichever is less. For more information, see Carrying on a business incurring deductible non-business expenditure.
  
• If you are an individual, your prepaid non-business expenditure is immediately deductible under the 12-month rule if
  • the eligible service period for the expenditure is 12 months or less, and
  • the period ends no later than the last day of the income year following the year in which the payment is made.
   

For more information, see Individual taxpayers incurring deductible non-business expenditure.

• If you are an individual, your deduction for prepaid non-business expenditure is apportioned over the eligible service period or 10 years, whichever is less, if the eligible service period is more than 12 months or it ends after the last day of the next income year. For more information, see Individual taxpayers incurring deductible non-business expenditure.