Carrying on a business incurring deductible non-business expenditure

If you are an individual taxpayer, see Individual taxpayers incurring deductible non-business expenditure.

If you are a small business entity or would be a small business entity if the aggregated turnover threshold was $50 million, see Small business entities.

Non-business expenditure is any expense you incur in an activity that will earn assessable income that does not amount to a business. For an entity carrying on a business, there may be occasions when you incur deductible non-business expenditure. For example, if you incur expenditure for a rental property held as a passive investment.

Summary of rules

• If you are not an individual or a small business entity or an entity that would be a small business entity if the aggregated turnover threshold was $50 million, your deduction for prepaid non-business expenditure is apportioned over  
  • the eligible service period, or
  • 10 years, whichever is less.
   
• Prepaid non-business expenditure that is subject to the tax shelter rules is apportioned over  
  • the eligible service period, or
  • 10 years, whichever is less.
   

See also:

• Investments in tax shelter arrangements

Use this guide to work out your deduction you can claim for expenses you incur for things that will be done in a later income year.