![]() ![]() On 1 December 2021, Mike makes a lease payment to cover the period 1 December 2021 to 31 December 2022. Mike runs a delicatessen from leased premises. The eligible service period continues until the end of the last day the thing under the agreement ceases to be done or 10 years, whichever is earlier. on the day the expenditure is incurred, whichever is later.the day the thing under the agreement begins to be done, or. ![]() The eligible service period is the period during which the thing is to be done under the agreement in return for the expenditure. Special rules apply to prepayments under tax shelter arrangements. The prepayment rules only apply to amounts that would be deductible under the general deductions or certain research and development (R&D) provisions. it relates to a ‘pre-RBT (Review of Business Taxation) obligation’.The ‘eligible service period’ cannot exceed 10 years.Ī prepaid expense may be immediately deductible if: Generally, a prepaid expense is deductible over the ‘eligible service period’. ![]() These rules apply to prepaid expenses that would ordinarily be immediately deductible in full in the year in which they are incurred. The prepayment rules alter the timing of deductions for certain prepaid expenses. End of example What are the prepayment rules? The prepayment rules will not apply because the provision of the professional publication will be completed in 2021–22. The subscription covers the period 1 July 2021 to 30 June 2022. On 1 July 2021, she paid $1,500 for an annual subscription for the monthly provision of a professional journal. Example: Expenditure that is not a prepaid expense ![]()
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