ato logo
Search Suggestion:

Taxpayers carrying on a business incurring deductible business expenditure

Last updated 27 May 2020

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.
     
  • 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.
     
  • 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
    • the period ends no later than the last day of the income year following the year in which the payment is made.
     
  • If you are an individual and the eligible service period is more than 12 months or it ends after the last day of the next income year, your deduction for prepaid non-business expenditure is apportioned over
    • the eligible service period, or
    • 10 years, whichever is less.
     

See also:

QC62041